Currency in circulation rose by N95.13bn from N2.29tn at the end of June to N2.39tn in July, according to the latest statistics obtained from the Central Bank of Nigeria on Thursday.
The CBN data showed that currency in circulation, which stood at N2.3tn in April, rose slightly to N2.35tn as of the end of May.
The apex bank stated in its report titled ‘Currency-in-circulation and deposits at the CBN’ that currency-in-circulation on quarter-on-quarter basis fell by six per cent to N2.29tn at the end of March 2020, compared with a decline of 7.5 per cent at the end of the first quarter of 2019.
It noted that this was in contrast to the growth of 21.8 per cent recorded at the end of the fourth quarter of 2019.
The report said, “The development, relative to the level in the preceding quarter, reflected mainly the decline in currency outside depository corporations and the fall in vault cash, owing to the increase in Cash Reserve Ratio by the bank.
“The monetary authority’s liabilities to other depository corporations grew by 26.1 per cent to N7.85tn at end-March 2020, compared with the growth of 24.7 per cent and 23.6 per cent in the fourth quarter of 2019 and the first quarter of 2019 respectively.
“The development reflected the increase in CRR by the CBN.”
It added that reserve money grew by 17.1 per cent to N10.14tn at the end of March, compared with the growth of 23.9 per cent and 13.5 per cent in the fourth quarter of 2019 and the first quarter of 2019 respectively.
The development reflected mainly the 3.7 per cent growth in net foreign assets on the assets side and 26.1 per cent growth in total banks’ reserves on the liabilities side.
Currency in circulation is defined as currency outside the vaults of the central bank; that is, all legal tender currency in the hands of the general public and in the vaults of the Deposit Money Banks, according to the apex bank.
The CBN stated that it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in Nigeria.
This approach involved tracking the movements in currency in circulation on a transaction by transaction basis.
It said for every withdrawal made by a DMB at one of the CBN’s branches, an increase in the CIC was recorded, adding that for every deposit made by a DMB at one of the CBN’s branches, a decrease in the CIC was recorded.
The transactions are all recorded in the CBN’s CIC account, and the balance on the account at any point in time represents the country’s currency in circulation.
According to the apex bank, analysis of the currency in circulation showed that a large and increasing proportion of the naira outside the commercial banking system was held by the general public who hoard a lot of the new banknotes.
