ABUJA(Sundiata Post) – The currency in circulation (CIC) in the country has surged to N19.1 trillion over the past five months, despite the Monetary Policy Committee’s (MPC) tightening stance, according to recent data from the Central Bank of Nigeria (CBN).
This growth highlights significant monetary dynamics within the country, as the overall money supply approaches the N100 trillion mark. CIC encompasses banknotes and coins in active use within the economy but excludes those held in the CBN’s vaults or returned by banks.
The CBN’s Money and Credit Statistics reveal that in the first three months of 2024 (January, February, and March), the CIC was N11.21 trillion. In April and May, the figures were N3.922 trillion and N3.965 trillion, respectively, culminating in a total of N19.09 trillion for the reporting period. This increase indicates heightened economic activity and a potential rise in demand for cash transactions.
Moreover, Nigeria’s money supply (M3) has nearly reached N100 trillion, with May 2024’s statistics showing a new peak of N99.235 trillion—a 2% increase from April’s figure of N96.974 trillion and a 78% year-on-year rise from N55.69 trillion in 2023. Except for a 3% decline in March 2024, the money supply has consistently increased, defying the CBN’s tightening monetary policies.
The MPC has maintained a tightening stance, typically involving higher interest rates and other measures to control inflation and stabilize the currency. However, economists note that the rise in currency circulation suggests persistent liquidity in the economy, posing challenges for effective monetary management.
While the increased CIC supports economic transactions and growth, careful monitoring is required to prevent inflation and ensure economic stability. The CBN Governor, Olayemi Cardoso, recently stated that the MPC is closely monitoring inflation and will decide on interest rates accordingly.
Reacting to these statistics, Paul Alaje, Chief Economist and Partner at SPM Professionals, pointed out that current inflation trends indicate fundamental issues with the Federal Government’s policies over the past nine years, as inflation has consistently remained in double digits.
“There has been a significant surge in food prices, and poverty has increased as well. Going forward, the MPC may continue its tightening measures if inflationary pressures persist. The interplay between currency circulation and money supply will be crucial in shaping Nigeria’s monetary policy and economic landscape,” Alaje commented.
