The Central Bank of Nigeria has disclosed that the naira in circulation rose by 2.5 per cent to N2.06tn in October from N2.01tn reported in September.
The Executive Vice Chairman, Highcap Securities, Mr David Adonri, said the increase in currency in circulation for October could be due to the Federal Government’s implementation of the 2019 budget with more funds released to finance key projects.
He said, “If the apex bank decided to buy financial instruments from authorised dealers. The CBN can pump money into the economy which can increase volume of physical currency in circulation.
“Also, If the banks are giving out loans and advances to their customers, it is expected to increase the currency in circulation.”
The Managing Director, Cowry Assets Management Plc, Mr Johnson Chukwu, attributed the increase in currency in circulation for the month under review to penalties imposed on online payment transactions.
The apex bank in September 16 directed the strict implementation of Merchant Service Charge, which would impose more charges on all point of sale transactions.
Chukwu said, “Banks customers may be shifting from online payment to cash. That is the only thing I know could be a leading factor to increase the currency in circulation for October. If you look at it, there is a N50 charge on PoS transactions and that alone will make banks’ customers to do transactions with cash instead of paying additional money. Mind you, for a low value purchase, customers are to pay N50 more than the amount of an item a customer bought.”
The Chief economist/head of research at PAC research, Mr Moses Ojo attributed the hike in currency in circulation to 2019 general elections, stressing that the CBN’s cashless policy of 2002 had worked in movement of physical currency.
He said, “There are a lot of informal activities that cannot be documented when it comes to movement of currency. The main reason why currency in circulation increased this year is due to the elections.”
The apex bank disclosed that currency in circulation was N2.02tn in August; N2tn was reported in July; N2.01tn in June and N2.11tn in May 2019.
The CBN on its official website said N2.16tn was the total currency in circulation in April.
For March, it was N 2.15tn. It was N2.24tn and N2.14tn in February and January, respectively.