Nigeria’s currency in circulation fell to a record low of N1.39 trillion in January 2023, representing the lowest level since December 2015, or seven years ago.
This is according to data obtained from the Central Bank of Nigeria (CBN). The total amount mopped up in just a month of January alone is N1.6 trillion.
The decline followed the CBN’s aggressive monetary policy to phase out old currency notes and introduce limited new notes into the economy.
CBN Policy is working
Specifically, currency in circulation reduced by 54% in January 2023 compared to N3.01 trillion recorded the previous month.
In the same vein, the currency outside the vaults of the banks was reduced by a whopping 69.3% to N788.92 billion from N2.56 trillion recorded in December 2022.
This is on the back of huge old naira notes deposits by Nigerians in a bid to beat the initial January 31st deadline. Recall that the Central Bank had set a deadline of January 31st, 2023 for the decommissioning of old naira notes before announcing an additional 10-day extension.
To save the value of their currencies, Nigerians trooped to banks to deposit their old notes, which contributed to the huge decline in the currency outside the bank.
However, the decline in currency circulation was followed by a cash scarcity amongst the populace of the country, with sustained queues at ATMs and banking halls in search of cash withdrawals.
Government actions on currency swap
The CBN Governor, Godwin Emefiele, during an MPC press briefing in October 2022 noted that the volume of higher denominations in the economy was fuelling the rise in inflationary pressure and that the apex bank was going to gradually reduce the volume of N500 and N1,000 in circulation.
The President, Muhammadu Buhari, also supported this move last week when he extended the use of old N200 notes until April 10th, 2023, while the N500 and N1,000 old notes became obsolete.
The President, however, stated that the naira scarcity suffered by Nigerians was due to unscrupulous banking officials entrusted with the process of implementing the new monetary policy.
Other Data Breakdown
Nigeria’s money supply (M3), which comprises net foreign assets and net domestic assets, rose to N53.27 trillion in the review month, a 2.2% increase from N52.14 trillion recorded the previous month.
- This is following a 7% increase in net foreign assets to N4.55 trillion, while net domestic assets increased marginally month over month to N48.72 trillion.
- Demand deposits increased by 11.3% month-on-month in January 2023 from N18.12 trillion to N20.19 trillion.
- Quasi money, which refers to non-cash assets that are highly liquid and easily converted to cash, rose by 3% in the review month to N32 trillion.
