By Kayode Tokede
The Central Bank of Nigeria (CBN) has disclosed that currency in circulation has dropped to N1.9trillion in January 2018 from N2.15 trillion in December 2017.
According to Nigerian NewsDirect findings, N2.15 trillion reported by CBN was the highest naira in circulation reported in 2017.
The CBN’s economic report for fourth quarter disclosed that, “at N2.15 trillion, currency-in-circulation rose by 21.1 per cent, above the level in the third quarter of 2017. The development reflected the growth in currency outside banks.
“Total deposits at the CBN amounted to N13.17 trillion, indicating 7.5 per cent increase over the level at the end of the third quarter of 2017. The development was as a result of the rise in the deposits of banks, Federal Government and the “Others” in the review quarter.
“Of the total deposits at the CBN, the shares of the Federal Government, Banks and “Others were N6,018.10 billion (45.7 per cent), N4,320.37 billion (32.8 per cent) and N2,834.02 billion (21.5 per cent), respectively.
“Growth in banks’ reserves at the CBN and currency-in-circulation accounted for the 16.5 per cent rise in Reserve Money (RM) to N6,477.6 billion at end-December 2017, compared with the level at end-September 2017.”
Currency in circulation between November and December 2017 was at N1.79 trillion and N1.89 trillion respectively, the CBN revealed on its website
CBN disclosed that the currency in circulation, which is the physical money used for transactions between consumers and businesses, opened this year at N1.99 trillion and closed in February at N1.97 trillion.
Commenting on increasing currency in circulation, currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, had hinted that excess liquidity in the economy was due to Yuletide celebration that has leveraged on growth in currency in circulation, stressing that Nigerians are finding it difficult to embrace the cash policy of the CBN.
“The market is liquid and it is due to current season of the year. We have seen a lot of Treasury Bills that have matured which the CBN has not rolled over. Market is awash with liquidity coming from CBN suspension of Open Market Operation (OMO) and slowdown in the foreign exchange sales.”
He explained further that Nigeria is still more of a cash economy, facing infrastructure challenges.
“Someone can blame infrastructure deficit to CBN’s good intention of making Nigeria a cashless society. The infrastructure that will make the cashless policy work is missing compared to what we have in Kenya.
The apex bank in 2002 introduced the cashless policy to eliminate the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, among others.)
CBN said N1.98 trillion and N1.97 trillion was in circulation in March and April respectively but dropped to N1.89 trillion in May as CBN’s mop up of liquidity in the system.
Further investigation revealed that currency in circulation moved to N1.87 trillion in June and N1.77 trillion in July and increased by 5.6 per cent to N1.86 trillion in August.
The amount of Naira in circulation according to CBN in September 2017 dropped to N1.78 trillion and closed October at N1.79 trillion.