Experts Blame Hoarding as Currency Outside Banks Rise to N2.34trn in April
Currency outside the banks has spiked for the fourth consecutive month to N2.08trillion in April 2023, about 87.43 per cent of total currency in circulation (CIC) that closed that month under review at N2.38trilllion.
The Money and Credit Data for April released by the Central Bank of Nigeria (CBN) showed that currency-in-circulation, rose by 42 per cent from N1.68 trillion in March to N2.38 trillion in April.
THISDAY checks revealed that the rise is slowly sprinting to the prehistoric peek of N2.73 trillion of currency outside banks as of September 2022, which was 85 per cent of N3.2 trillion of CIC
This was what prompted the CBN to act against this hoarding and opted to redesign the naira.
A nine-month breakdown that prompted the naira redesign policy showed a N3.23 trillion currency in circulation in September 2022, N3.29 trillion in October 2022, November 2022, N3.16 trillion and December 2022, N3.01 trillion. In January 2023, currency in circulation was N3.29 trillion, February 2023, N982 billion, March 2023, N1.68 trillion and April 2023, N2,38 trillion.
Also, the nine-month breakdown of currency outside the banks reveals that the month of September was N2.72 trillion October N2.83 trillion November N2.65 trillion and December N2.57, While January recorded its lowest at N792 billion, February N843 billion, and in March N1.45 trillion and April N2.07 trillion.
Experts said the spike is vastly because of the spillover effect of the cash crunch adding that average Nigerians are hoarding the new notes and are not depositing in the banks because of distrust in electronic banking.
“The increase in currency outside the banking system is something that is expected largely because of how the naira redesign policy was implemented. An average Nigerian recall what we suffered and because it was suspended till December, a lot of people are preparing themselves for what would happen in December and most people are hoarding the new notes, ”said Head, of Financial Institutions Ratings at Agusto & Co, Mr. Ayokunle Olubunmi.
Also, he noted that because Nigeria just concluded an election, there are a lot of funds still circulating in the economy and that confidence in electronic banking has not returned to pre-policy.