- The Central Bank of Nigeria (CBN) has stated that the money in circulation has declined
- In data posted on its website, the apex bank revealed that the amount shrunk by N7.51 trillion from N2.6 trillion to N2.35 trillion
- CBN said before January 2023, the total money in circulation in Nigeria declined from N3.29 trillion
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The Central Bank of Nigeria (CBN) has revealed that the money in circulation in Nigeria declined from N2.6 trillion as of the end of June 2023 to N2.37 trillion by the end of July 2023.
The development is the first time the amount has declined since February.
CBN discloses methods used to track money in circulation
Data from CBN showed that the figure represents a decline of N7.51 trillion in 30 days.
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Currency in circulation is money outside the vaults of the CBN, meaning legal tender currencies in the hands of the public and commercial banks.
The apex bank said it uses an accounting/statistical/withdrawal and deposits approach to calculate the currency in circulation in Nigeria.
Punch reports that the approach requires tracking the currency movements in circulation on a transaction-by-transaction basis.
The bank revealed that for every withdrawal made by commercial banks such as Access Bank, UBA, Zenith and other banks at one of its branches, an increase in currency in circulation was recorded. And it records every deposit made at any of its branches as a decrease in cash in circulation.
Money in circulation declined before January 2023
The transactions are documented in the CBN's Currency in Circulation account, and the account's balance at any time represents money in circulation in the country.
Before January 2023, the total money in circulation in Nigeria declined from N3.29 trillion as of the end of October 2022 to N1,38 as of the end of January 2023 due to the naira swap policy of the CBN.
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CBN data showed the figure represents a drop of N1.91 trillion in the three months.
According to a report by Legit.ng, in July 2023, CBN revealed that the money supply in Nigeria spiked to N64.3 trillion in June 2023, the highest ever recorded in Nigeria. The amount contrasts with the N55.5 trillion recorded in May, a massive N8.8 trillion increase.
The Data is from the Central Bank of Nigeria, which revealed development in its credit statistics.
Money supply refers to the total amount available in an economy at a particular time.
CBN reduces cash in circulation
The amount includes physical currency, such as coins and banknotes, and various deposits held by individuals, businesses, and institutions in banks. It is also essential for assessing interest rates and inflation in a given period.
The current increase in money supply comes amid reports of rising inflation in Nigeria which the National Bureau of Statistics said now stands at 24.08%.
In another report, the CBN reduced currency in circulation to an all-time low of N982 billion, representing 235.03% at the end of February 2023.
The amount shrunk from N3.29 trillion at the end of October 2022 as CBN's aggressive naira mop-up and redesign policies took centre stage.
Data from CBN shows that N2.3 trillion was mopped up from circulation during the review period.
CBN fights to strengthen naira, mops N150 billion from Access Bank, Zenith, others, Via OMO Auction
Legit.ng reported that the Central Bank of Nigeria has mopped up about N150 billion via the Open Market Operation (OMO) auction on Thursday, August 10, 2023, to fight inflation and reduce excess liquidity, putting pressure on the Forex market.
The OMO auction began around 9.40 am on Thursday, August 10, 2023, and closed at 10.40. It had N30 billion in 96-day tenured bills, N40 billion in 187-da7, and N80 billion in 362-day bills.
The move is CBN’s first auction since July, when it raised interest rates.