Cbn Reported That The Currency In Circulation Reached Its Highest Point At N4.05Tn In The Month Of July.

Nume Ekeghe

The Central Bank of Nigeria (CBN) has announced that the currency in circulation reached an unprecedented level of N4.05 trillion in July 2024, marking a new record high. This represents an 11.05% increase since the beginning of the year and a significant 56.17% rise compared to the same period in 2023, according to the CBN’s Money and Credit Data. Analyzing the data further, it is observed that the year began with N3.65 trillion in circulation in January 2024, which remained stable in line with the typical post-holiday economic environment. Subsequently, February saw a modest rise to N3.69 trillion, a 1.18% increase from January. March recorded a more substantial jump to N3.87 trillion, marking a 4.76% month-on-month increase. In April, the currency in circulation reached N3.92 trillion, up by 1.39% from March, driven by heightened consumer spending during the Easter period. This upward trend continued in May and June, with the currency in circulation reaching N3.97 trillion and peaking at N4.04 trillion, representing monthly increases of 1.07% and 2.11% respectively. Experts attribute this trend to a growing lack of confidence in the banking system, as more Nigerians opt for cash transactions amid economic uncertainty. This shift has been particularly notable since September 2023 when Olayemi Cardoso assumed office as CBN Governor, with the currency in circulation standing at N2.76 trillion. Despite the surge in currency circulation, Nigeria’s economic growth remains sluggish, projecting a growth rate of 2.9% to 3.1% for 2024, which is among the slowest in West Africa. The National Bureau of Statistics (NBS) reported a 3.19% year-on-year growth in real Gross Domestic Product (GDP) for Q2 2024, slightly up from 2.98% in Q1 2024 and 2.51% in Q2 2023. However, inflation continues to be a pressing concern, with the headline inflation rate rising to 33.40% in July 2024, up from 29.9% in January, according to the NBS. In response, the CBN’s Monetary Policy Committee (MPC) has raised the Monetary Policy Rate (MPR) to a record 26.75% in an effort to curb inflation and stabilize the economy. This move highlights the CBN’s commitment to aggressive monetary tightening amidst ongoing economic challenges. Analysts suggest that the spike in currency circulation may indicate increased government spending aimed at mitigating the hardships faced by Nigerians. However, this influx of money into the economy has also fueled inflationary pressures, causing concerns. David Adnori, Vice President of Highcap Securities Limited, explained that increased government spending leads to higher inflation, as more money in circulation drives up the cost of goods and services, ultimately eroding purchasing power. He emphasized that the current economic situation in Nigeria reflects the classic trade-off in economic policy. While increased spending may boost income in the short term, it also leads to higher inflation, reducing the real value of earnings and diminishing purchasing power.


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