The recent Money and Credit Statistics Data published by the Central Bank of Nigeria (CBN) has revealed that currency outside banks stood at N2.1 trillion in May from N2 trillion at the end of April 2023.
Currency outside the vaults of the banks was N2.57 trillion, representing 85.2 percent of the total currency in circulation at the end of 2022.
The total currency in circulation in the Nigerian economy stood at N3.01 trillion at the end of the year, a N313.1 billion reduction compared to N3.33 trillion recorded in the previous year.
Also between May and June 2023, the narrow money supply (M2) rose by N8.8 trillion (15.9 percent). This rise in money supply, according to the data, was primarily driven by a N6.7 trillion increase in Net Foreign Assets.
The devaluation of the naira from N450/$ to N760/$ impacted banks’ balance sheets, resulting in increased liquidity.
The data also revealed a 185 percent surge in currency outside the banking system since January, while public sector borrowing rose to N31.23 trillion.
The increase in money supply is likely to exert additional pressure on prices, expert say. In June, the National Bureau of Statistics reported an inflation rate of 22.79 percent which partly reflects the rising cost of living in the country.
