In spite of reported scarcity of naira in the banking system, data made available by the Central Bank if Nigeria (CBN) show that currency in circulation rose eight per cent to a new high of N2.99 trillion by the end of October, 2023.
The value represents a N230 billion increase from the N2.76 trillion recorded in September, 2023, and an increase of N1.6 trillion from N1.39 trillion recorded at the beginning of 2023.
The apex bank defines the currency in circulation as currency outside the vaults of the Central Bank of Nigeria, meaning, all legal currency notes in the hands of the general public and in the vaults of the Deposit Money Banks (DMBs).
With this new high of almost N3 trillion, currency in circulation appears to be on the rise to the level it was in October 2022 (N3.29 trillion) before the naira redesign policy of the CBN.
Analysts say, it is surprising the currency in circulation is increasing, while the deposit money banks say there is scarcity of naira, with many of the banks restricting withdrawals by depositors to a maximum of N 20,000 as it was the case with some banks in Lagos last week.
“Certainly, if the apex bank said money in circulation it has to be naira, not the dollar and pounds sterling that is clearly a scarce commodity. How come, here in Lagos, many of the banks could not give more than N20,000 and their ATM machines perpetually dry last week”, David Agumo argued.
It is widely believed that, it was as a result of the scarcity of the naira that made the CBN announce the continued usage of the old naira notes as legal tenders indefinitely.
At a meeting of the Monetary Policy Committee (MPC) in October 2022, the former CBN Governor Godwin Emefiele, said that the increase in inflationary pressure was being fueled by the prevalence of N1,000 and N500 bills in circulation.
Emefiele stated in October 2022 that the banknotes of N200, N500, and N1,000 would be redesigned. He also announced the introduction of new notes, giving a deadline for old N200, N500 and N1,000 notes.
