Amid excess liquidity in the nation’s economy, the Central Bank of Nigeria (CBN) has disclosed that currency in circulation gained eight per cent year-on-year to close at N2.15 trillion in 2017.
According to InsideBusiness findings, N2.15 trillion reported by CBN was the highest naira in circulation reported in 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, open this year at N1.99 trillion and closed in February at N1.97 trillion.
.Commenting on increasing currency in circulation, currency analysts at Ecobank Nigeria, Mr. Kunle Ezun, hinted that excess liquidity in the economy is due to Yuletide celebration that has leveraged 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 slow down 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 and trillion 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.
The CBN economic report for May stated that, “Currency in circulation, at N1.89 trillion, fell by 3.9 per cent in the review month, compared with the 0.4 per cent decline at end April 2017.
“This was due to the 5.4 per cent fall in its currency outside banks component,” the report by CBN explained.
Further investigation by 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.
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