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The Central Bank of Nigeria (CBN) has disclosed that the value of Nigeria’s currency in circulation surged to N3.87tn by the end of March.
The latest money and credit statistics published on the CBN’s website indicate that currency in circulation experienced a steady increase, rising from N3.69tn in February and N3.65tn in January.
Additionally, currency outside banks witnessed progressive growth throughout the first quarter, climbing from N3.28tn in January to N3.41tn in February and further to N3.63tn in March.
Data analysis reveals that over 90 percent of the currency in circulation is held outside the banking system, suggesting a preference among Nigerians for cash transactions.
During the March meeting of the Monetary Policy Committee, one of its members, Muhammad Abdullahi, highlighted the significance of reducing high currency holdings outside banks as a means to mitigate inflationary pressures in the country.
Abdullahi stated, “The bank’s response to the drivers of headline inflation is targeted at addressing identified monetary drivers such as money supply growth, exchange rate depreciation, and Currency-Outside-Banks, the combined impact of which will dampen inflationary pressure significantly.”
In January 2024, during the height of the currency redesign policy, currency in circulation amounted to N1.386tn, with cash outside banks representing 57 percent at N792.184bn. Subsequently, by February, cash outside banks increased to N843.311bn, accounting for 85.9 percent of the N982.097bn total circulation.
In March, this percentage decreased slightly to 85.8 percent, with N1.445tn out of the N1.683tn currency in circulation held outside the banking system.
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