Currency in circulation hits all-time high, returns to pre-naira redesign periods

Data from the Central Bank of Nigeria shows that currency in circulation in Nigeria has increased to N2.299 trillion in October 2023, the highest since this year.

The amount represents 115.10% compared to the N1.39 trillion recorded in January this year and 8.33% higher than the N2.76 trillion in September.

The Naira redesign caused a crash in currency in circulation

In October last year, the apex bank withdrew the old N200, N500, and N1000 notes from circulation. It issued new designs, resulting in a temporary decline in currency in circulation as Nigerians exchanged their old naira notes for new ones.

BusinessDay reports that after the exchange period ended, the country witnessed a spike in currency in circulation as people withdrew more cash.

Analysts believe the Nigerian economy has witnessed some growth, leading to demand for cash transactions.

Legit.ng reported that in September, currency in circulation in Nigeria spiked by N1.7 trillion following increased cash transactions.

Data from the Central Bank of Nigeria as of Thursday, September 21, 2023, shows that the currency in circulation hit about N2.7 trillion as of the end of August 2023.

Nigeria witnessed a slight decline in currency in circulation

In February 2023, the country had a mere N982.1 billion as currency in circulation following the naira redesign policy of the CBN.

The amount has increased since the policy ended, and cash mopped up from the system returned.

CBN data shows that it mopped up N2.3 trillion from circulation during the period under review. Punch reports that the apex bank defines money in circulation as currency outside the banking system and the vaults of the CBN.

It means all legal tender currencies are in the hands of the public and commercial banks' vaults.

The bank said it utilizes the "accounting/statistical/withdrawals & deposits approach" to compute the currency in circulation in Nigeria.