Currency in circulation increases to N4.14trn in August 2024, says report
Nigeria’s currency in circulation increased to N4.14 trillion in August 2024, about 2.25per cent increase from N4.05 trillion reported by the Central Bank of Nigeria (CBN) in July 2024.
The breakdown showed that January 2024 began with the currency in circulation at N3.65 trillion.
This stable figure indicated a moderate start to the year, aligning with typical post-holiday economic activities. By the end of February 2024, the currency in circulation slightly increased to N3.69 trillion, a growth of N43 billion or 1.18 per cent from January.
March 2024 saw a more pronounced increase, with the currency in circulation rising to N3.87 trillion, a month-on-month increase of N175 billion or 4.76 per cent.
The upward trend continued in April, with the currency in circulation reaching N3.92 trillion. The N53 billion or 1.39 per cent increase from March 2024 suggests sustained economic activity and increased consumer spending during the Easter period.
May 2024 experienced a further increase to N3.97 trillion, up by N42 billion or 1.07 per cent from April 2024, while the most notable rise occurred in June 2024, with the currency in circulation peaking at N4.04 trillion, an increase of N84 billion or 2.11 per cent from May 2024.
It reached N trillion in June 2024, it stood at N4.05 trillion.
Experts had 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 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.
A recent data from the National Bureau of Statistics (NBS) revealed that the domestic economy sustained its positive growth momentum in Q2 2024, as the real Gross Domestic Product (GDP) grew by 3.19per cent y/y (Q1 2024: +2.98per cent | Q2 2023: +2.51per cent y/y).
Inflation has been a significant concern, with the headline inflation rate at 32.15per cent in August 2024 from 29.9 per cent reported January 2024, according to the NBS.
The Monetary Policy Committee (MPC) of CBN has increased the Monetary Policy Rate 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.
He explained, “When you have more money in circulation, it means that there has been an increase in government spending, and that means that there will be inflation which means that cost of goods will go higher, as much money will keep chasing fewer goods and services.”
