By Kayode Tokede
The Central Bank of Nigeria (CBN) has disclosed that currency in circulation increased to N2.31trillion in April 2020, over increased bank customers’ withdrawal amid the coronavirus pandemic lockdown.
President Muhammadu Buhari had on March 29, ordered an initial lockdown for 14 days in Lagos, Ogun and Federal Capital Territory (FCT) as one of the measures aimed at containing the spread of the coronavirus disease.
The lockdown was extended for another 14 days in April, forcing increased withdrawal from the banking sector, our correspondent can report.
Correspondent also gathered that reported figure by the apex bank in April is the highest currency in circulation this year, second-highest amount when the N2.44trillion physical currency was reported in December 2019.
Commenting on increasing currency in circulation, currency analysts hinted that excess liquidity in the economy has leveraged growth in currency in circulation, stressing that Nigerians are finding it difficult to embrace the cash policy of the CBN.
They expressed that Nigeria is still more of a cash economy over infrastructure challenges, stressing that bank customers withdraw cash towards the federal government coronavirus lockdown.
“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,” analyst expressed
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.)
However, at Investors & Exporters Foreign Exchange (I& EFX) window on Tuesday, while the Naira lost by 0.29per cent and 0.54 per cent against the Euro and Pounds to close at N422.96 and N474.03 respectively, it closed flat against the Dollar at N386.33.
According to FMDQ Exchange, a total of $8.67million was traded on the I & E FX window on Tuesday.
At the parallel market, while the Naira closed flat at N465 against the EUR, it lost 1.09 per cent against the Dollar to close at N460. However, it closed at N540 against the pounds, gaining 0.92 per cent.
“Going forward, we expect the FX market to be dictated by heightened dollar demand and CBN foreign exchange policies.,”
Money market rates moved in opposite directions today as Open Buy Back inched up by 13basis points to 1.90 per cent while Overnight rate shed three basis points to close at 2.30 per cent.
The bond market was positive today as yields declined at the short and long end of the curve. While the yields on the five-year and seven-year benchmark bonds dropped by 10basis points and 21 basis points at 10.02 basis points and 10.75 basis points respectively, the yield on the 10yr benchmark bond closed flat at 11.14 basis points.