Currency in Circulation Hits Record High at N3.97 Trillion After CBN Interest Rate Hike

• Nigeria’s currency in circulation has risen to an all-time high of N3.97 trillion as of May 2024
• The figure represents a 56.93% increase from the N2.53 trillion recorded the preceding month
• The development comes despite an increase in interest rates by the Central Bank of Nigeria (CBN)

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.

Nigeria’s currency in circulation surged to its highest in history, N3.97 trillion, in May 2024, resulting in a N314.6 billion rise year-to-date.

Data from CBN shows that the figure represents a spike of N42.15 billion, 1.17% monthly from the N3.92 trillion recorded in April 2024, and N1,44 trillion, representing 56.93% from the N2.53 trillion reported in May this year.

2024 sees the highest cash in circulation

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Currency in circulation or money supply refers to the amount of cash in the form of paper or coins available physically in a country and is used to conduct transactions.

At the beginning of 2024, during the CBN's naira redesign policy, currency in circulation stood at about N3.65 trillion, and in January 2024, it rose to N3.69 trillion.

ThisDay reports that CBN disclosed that currency in circulation in March this year stood at N3.87 trillion, a 4.76% monthly increase from N3.69 trillion in February.

The amount later rose to N3.9 trillion in April 2024 at N3.92 trillion and rose again to N3.97 trillion in May.

According to the CBN, currency in circulation as of December 2023 stood at N3.63 trillion from N1.39 trillion reported in January 2023.

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Analysts say the amount in circulation is caused by public distrust in the banking system, especially following Heritage Bank's liquidation.

They stress that increased cash transactions are driven by economic uncertainty or other economic factors.

Reports say the rise in the money supply came amid the CBN's interest rate hike to curtail inflation in the country.

CBN’s Monetary Policy Committee (MPC) raised the country’s Monetary Policy Rate to 26.25% to fight raging inflation and bolster economic stability.

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Legit.ng previously reported that data from the CBN shows a rise in currency outside the banking system for November 2023, a record high since the naira redesign policy.

The bank’s Money and Credit Statistics show that the total currency in circulation for November amounted to N3.35 trillion, while currency outside the banking system is about N3.03 trillion, comprising 92% of the actual currency in circulation.

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The record surpasses the previous N2.73 trillion in currency outside the banks, reported in September 2022, representing 85% of the N3.2 trillion in circulation.

Source: Legit.ng