The amount of currency in circulation in Nigeria surged by N1.7 trillion as a result of increased cash transactions.
According to data from the Central Bank of Nigeria, as of the end of August, the total currency in circulation had reached N2.7 trillion.
This increase followed a period during which the currency in circulation had dropped to N982.1 billion at the end of February 2023 due to the Central Bank’s naira redesign policy.
However, once the policy concluded, there was a consistent uptrend in the currency’s circulation as cash that had previously been withdrawn from circulation to promote electronic payments was reintroduced into the economy.
Notably, the currency in circulation had experienced a significant decline of 235.03 percent, falling from N3.29 trillion at the end of October 2022 to N982.1 billion by the end of February 2023, primarily due to the naira redesign policy.
During this period, approximately N2.3 trillion was removed from circulation.
The Central Bank of Nigeria defines currency in circulation as all legal tender currency held by the general public and within the vaults of Deposit Money Banks, excluding currency stored in the central bank’s vaults.
They use an accounting and statistical approach to track the movement of currency in circulation, recording increases in currency when Deposit Money Banks withdraw from the Central Bank and decreases when they make deposits at the Central Bank branches.