LAGOS Nigeria (VOICE OF NAIJA)- The Central Bank of Nigeria (CBN) says that one of the major headlines of the country’s inflation is cash circulating among Nigerians.
Data revealed on the apex bank website shows that the nation’s currency in circulation has risen to N3.87tn at the end of March compared to two previous months of February and January with N3.69tn and N3.65tn respectively.
In their personal statements, one of the members of the Monetary Policy Committee of the CBN at their March meeting, Muhammad Abdullahi, posited that the apex bank had identified high currency outside banks as one of the monetary drivers of the country’s inflation.
He said, “From available data, prices of domestic food items remain the major driver of headline inflation because of supply shortages and high cost of logistics and distribution.”
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“While this cannot be directly influenced using monetary policy tools, the bank’s response to the drivers of headline inflation is targeted at addressing identified monetary drivers such as money supply growth,exchange rate depreciation and Currency-Outside-Banks, the combined impact of which will dampen inflationary pressure significantly.”
The report also revealed that currency outside banks have also increased progressively during the first quarter, growing from N3.28tn in January to N3.41tn and N3.63tn in February and March, respectively.
The data revealed that over 90 per cent of currency in circulation is held outside of the banking system, indicating Nigerians are holding more cash.
In January 2024, at the height of the currency redesign policy, currency in circulation stood at N1.386tn with the percentage of the cash outside the banks standing at 57 per cent at N792.184bn.
By February, the cash outside banks rose to N843.311bn, representing 85.9 per cent of the N982.097bn that was in circulation.
It dropped further in March to 85.8 per cent with N1.445tn of the N1.683tn CIC, outside the banking system.
Punch