N52.5 Billion Mopped Up From Circulation, Says CBN

By Uche Mbah

A total of N52.5 Billion was removed from circulation in the month of June, if the latest figures of the Central Bank Of Nigeria, CBN, is anything to go by.

At the end of May, N2.35 trillion was in circulation, but a month later, the amount of currency in circulation was reduced to N2.39 trillion.

Ironically, there was an increase in liquidity during the lockdown occasioned by the Coronavirus Pandemic. This was attributed to the injection of palliatives to certain categories of people by some states in the country. In comparison, there was an increase in liquidity at the end of April. By the end of April, it rose from  N2.29tn at the end of March, rose to N2.3tn.

“Currency in circulation at end-November 2019 rose by 9.9 percent to N2.2tn, in contrast to the decline of 0.4 percent at the end of the third quarter of 2019″. the CBN said.

“The development, relative to the level in the preceding quarter, reflected mainly the increase in its currency outside banks component and seasonal factors.

“Currency in circulation is defined as a 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.”

Part of the reason was the pressure on cash due to the plan of the apex bank to harmonize foreign exchange, a plan that has reduced the cash in circulation and increased interbank rates. The Bureau de changes were scrambling to buy the dollar at the apex bank, thereby tying up the loose currency in the deals.

It may also mean that there is far fewer cash in circulation. The CBN uses the index of withdrawals from Deposit Money Banks, which is automatically recorded as cash in circulation, whereas there are many people who prefer to keep huge sums out of circulation for fear the money laundered being traced through banking transactions.