Naira Crisis: CBN's Cashless Policy Gathers N1.6 Trillion Cash in Circulation in One Month
- The Central Bank of Nigeria cleared up about N1.6 trillion of the cash in circulation in January alone
- The amount represents the lowest since 2015, resulting in N1.39 trillion in January alone
- The massive drop is due to CBN’s aggressive monetary policy to end the circulation of old naira notes
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Cash in circulation in Nigeria dropped to a record low of N1.39 trillion in January 2023, representing the lowest level in the last seven years.
Data from the Central Bank of Nigeria (CBN) disclosed that the total amount received in January alone is about N1.6 trillion.
CBN's aggressive policy on naira redesign is responsible
The drop followed the apex bank’s aggressive monetary policy to end the circulation of old naira notes and introduce limited circulation of new notes into the economy.
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Notably, the currency in circulation dropped by 54 per cent in January of 2023, compared to N3.01 trillion recorded in December.
Also, currency outside banks dropped by about N69,3 per cent to N788.92 billion from N2.56 trillion recorded in December last year.
Reports say the huge naira haul by CBN is due to the rush by Nigerians to deposit their old naira notes to beat the January 31 deadline. The apex bank had fixed January 31, 2023, as the deadline for the phase-out of the old notes, which was later extended to February 10, 2023.
Nigerians had trooped to their banks to deposit their old naira notes to save the value of their money, contributing to the massive drop in the currency outside the bank.
Currency mop up lead to naira scarcity
Cash scarcity followed the fall in currency circulation as the CBN allegedly printed about N600 billion, leading queues at ATMs, limited withdrawals across the counter, and a hike in Point of Sale (PoS) charges.
The country’s money supply, comprising net foreign and net domestic assets, increased to N57.27 trillion in the month under review, representing a 2.2% rise from N53.14 trillion recorded the previous month.
The increase followed a 7 per cent increase in net assets to N4.55 trillion, while net domestic assets jumped marginally month-on-month to N48.72 trillion.
Demand deposits increased by 11 per cent month-on-month in January 2023 from N18.12 trillion to N20.19 trillion.
Non-cash assets, known as quasi-money, rose by 3 per cent in the month under review.
CBN says N900bn still outside the banking system as it extends deadline for cash swap
Legit.ng reported that the Central Bank of Nigeria (CBN) said about N900 billion is still held outside the banking system in Nigeria.
The governor of the CBN, Godwin Emefiele stated this while announcing the extension of the deadline for the exchange of old naira notes for new ones from January 31 to February 10, 2023.
According to Emefiele, in 2015, the currency in circulation was just N1.4 trillion but as of October 2022, the currency in circulation in Nigeria has surged to N3.23 trillion out of which only N500 billion was within the vaults of the banks and about N2.7 trillion still held in peoples homes.