The currency in circulation rose by N58.36bn to N2.84tn in September from N2.79tn in August, the latest figures obtained from the Central Bank of Nigeria showed on Sunday.
The currency in circulation rose to N2.81tn in July from N2.74tn at the end of June. It fell to N2.79tn in May from about N2.80tn at the end of April.
According to the CBN, the broad money supply rose to 5.83 percent in August from 2.91 percent in July.
It said this was largely driven by the growth of net foreign assets and net domestic assets by 12.35 and 4.30 percent respectively in August 2021, compared to 1.84 and 3.17 percent in July.
The apex bank said the growth in net foreign assets was largely driven by an increase in foreign asset holdings of commercial and merchant banks.
It said the increase in net domestic assets reflected the boost to aggregate credit net, which increased to 8.14 percent in August from 5.71 percent in July.
In the money market, the monthly weighted average interbank call and open buyback rates increased to 13.45 and 12.97 percent in August respectively from 10.72 and 11.60 percent in July.
This increase reflected the tight liquidity conditions in the banking system during the review period as the bank curtailed excess system liquidity, according to the central bank.
Currency in circulation is defined as currency outside the vaults of the central bank – that is, all legal tender currency in the hands of the general public and in the vaults of the Deposit Money Banks.
The CBN said it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in the country.
It said this approach involved tracking the movements in currency in circulation on a transaction-by-transaction basis.
According to the CBN, for every withdrawal made by a DMB at one of CBN’s branches, an increase in CIC is recorded; and for every deposit made by a DMB at one of CBN’s branches, a decrease in CIC is recorded.
The transactions are all recorded in the CBN’s CIC account, and the balance on the account at any point in time represented the country’s currency in circulation.