BREAKING: At N5.2trn, currency in circulation hits all-time high in January 2025

Following “Ember”, spending, currency in circulation in the Nigerian banking sector increased to N5.24 trillion in January 2025, according to the Central Bank of Nigeria (CBN). data.

The reported N5.24 trillion is the highest since the apex bank has been monitoring currency in circulation in the banking sector. The increasing currency in circulation is on the backdrop of CBN sustained printing of the local currency and hike in inflation rate in the country.

According to data by CBN, currency in circulation closed December 2024 at N4.88 trillion, gaining N1.22 trillion from N3.65 trillion the CBN reported January 2024.

Analysts expressed that the current pattern in currency in circulation is a reflection of growing lack of confidence in the banking system, stressing that an increased preference for cash transactions, possibly driven by economic uncertainty or other socio-economic factors.

When Mr. Olayemi Cardoso resumed office as CBN governor in September 2023, currency in circulation was at N2.76 trillion.

While there has been a significant surge in the currency in circulation, the country’s economic growth has been tepid, with Nigeria’s economic growth rate for 2024 projected to be around 2.9per cent and 3.1per cent, having one of the slowest growth rates in West Africa.

The Monetary Policy Committee (MPC) of CBN has increased the Monetary Policy Rate (MPR) to a historic high of 27.25 per cent to combat inflation and foster economic stability.

The announcement, made by CBN Governor, highlights the central bank’s proactive approach towards monetary tightening amidst challenging economic conditions.

This unprecedented move has not only set the Monetary Policy Rate (MPR) at its highest level to date but also reflects the CBN’s determined effort to address the persistent economic pressures.

Meanwhile, analysts believe the currency in circulation presupposes that there has been more spending in the economy especially by the government because of the hardship in the land.

“So, the government has to spend a lot. And when there is much more money in circulation and the government is spending so as to probably boost the people’s income, the resultant effect is inflation and that is why in every economic policy there is something called trade-offs, you cannot have much more in the circulation and at the same time have low inflation,” said Vice President, Highcap Securities Limited, Mr. David Adnori.