The Central Bank of Nigeria (CBN) reported that currency in circulation in Nigeria increased to N2.66 trillion in August, marking the highest level this year. This reflects a 2.48% month-on-month increase and a 17.14% year-on-year drop. The rise in currency in circulation comes amidst escalating inflation in the country, with the inflation rate hitting the highest level in over a decade in August. Finance experts attribute the increase to factors such as CBN interventions in foreign exchange and economic sectors, as well as lingering challenges with adopting cashless policies.
Key Points:
- Nigeria’s currency in circulation reached N2.66 trillion in August, the highest level in 2023.
- This represents a 2.48% month-on-month increase but a 17.14% year-on-year decrease.
- Nigeria’s inflation rate surged to 25.80% year-on-year in August, driven by various economic factors.
- The CBN introduced a currency redesign policy in October 2022, aiming to encourage cashless transactions and combat challenges like counterfeiting and illegal activities.
- However, the policy faced widespread disapproval and was subsequently reversed five months later.
Analysis: The surge in Nigeria’s currency in circulation, alongside the escalating inflation rate, underscores the economic challenges facing the country. The implementation of the currency redesign policy has been met with mixed reactions, and lingering doubts about electronic banking systems continue to contribute to the preference for physical cash. As Nigeria navigates these economic dynamics, close monitoring and potentially revised policies will be crucial to ensure stability and confidence in the financial system.
