Currency in Circulation Hits Historic Record as Naira Loses Value Against Dollar

• The amount of currency in circulation has increased to an all-time high of N4.3 trillion
• Similarly, a report showed that the currency outside of banks increased to N4.02 trillion in September
• More worrisome, according to experts, is the fact that over 95% of the cash in circulation is not now in banks

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

As of August 2024, the Central Bank of Nigeria (CBN) reported that the amount of currency in circulation has increased to an all-time high of N4.3 trillion.

As the amount of money in circulation increased from N3.86 trillion in August to N4.02 trillion in September, Daily Trust reported that the currency outside of banks is also competing fiercely.

Currency in circulation is the total amount of money in a nation that is physically utilized for transactions between customers and businesses, whether in the form of coins or paper money.

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It stands for the amount of money that the nation's monetary authority has issued, less the amount that has been taken out from the system.

Increased economic activity and expenditure by individuals and businesses are reflected in the increased amount of cash in circulation.

This is also a result of the devaluation of the naira and higher revenue received by all levels of government.

Experts say that the fact that more than 95% of the currency in circulation is currently not in banks is more concerning.

The amount of currency in circulation has steadily increased since the start of the year, starting with N3.65 trillion in January.

The amount of money in circulation in February was N3.69 trillion, a tiny rise of N43 billion or 1.18 percent from January.

It also climbed significantly to N3.87 trillion in March, and in April, it increased even more to N3.92 trillion.

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In May, the currency in circulation increased marginally to N3.97 trillion, up N42 billion or 1.07%, continuing the rising trajectory. It also hit an all-time high of 4.04 trillion, up 2.11% from May.

Additionally, there was a noticeable increase in March to N3.87 trillion, and in April, it rose even more to N3.92 trillion.

In May, the currency in circulation increased marginally to N3.97 trillion, up N42 billion or 1.07 percent, continuing the rising trajectory. It also hit an all-time high of 4.04 trillion, up 2.11 percent from May.

Meanwhile, Legit.ng has reported that Data obtained from FMDQ securities, where naira is officially traded, showed that the Nigerian currency closed at N1,678.87 per dollar on Friday, November 8, 2024.

Friday's exchange rate is 2.4% or N39.37 from the preceding day’s N1,639.50/$1.

The fall of the naira happened despite an improvement in the supply of forex to the spot market during the session.

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Money outside banks exceeds currency in circulation

Legit.ng earlier reported that data from the Central Bank of Nigeria (CBN) showed that the total currency in circulation hit N4.14 trillion, with N3.87 trillion currently outside the Nigerian banking system.

The development showed that 93.34% of Nigeria’s currency was in the hands of Nigerians and businesses, while 6.66% was in the banking sector.

Despite efforts to drive financial inclusion and promote transactions, the data showed continuous challenges for Nigeria’s banking system.

Source: Legit.ng