The CBN, in the report, disclosed that the currency in
circulation dropped by N70bn in January from N2.9tn as of December 2020.
According to the banking regulator, currency in circulation
rose from N2.5tn as of the end of October to N2.66tn in November.
The apex bank explained that it employed the
“accounting/statistical/withdrawals & deposits approach” to compute the
currency in circulation in Nigeria.
We learnt that the approach involved tracking the movements
in currency in circulation on a transaction by transaction basis.
This is how it is being done, for every withdrawal made by a
Deposit Money Bank at one of CBN’s branches, an increase in CIC is recorded,
and for every deposit made by a DMB at one of CBN’s branches, a decrease in CIC
is recorded.
And of course, the transactions are all recorded in the
CBN’s CIC account, and the balance on the account at any point in time
represents the country’s currency in circulation.
The CBN analysis of the currency in circulation saw that a
large and increasing proportion of the Nigerian currency outside the commercial
banking system was held by the general public who hoard a lot of the new
banknotes.
Recently, this medium report that the International Monetary
Fund (IMf) had claimed that the federal government turned down its advice that
it should further devalue the naira, which is over 18% overvalued so as to ease
external imbalances.
The IMF disclosed this through its Article 1V report for
Nigeria which was published on Monday, February 8, 2021.
The report read that President Buhari’s administration has
experienced pressure in the foreign exchange market due to global outflows
caused by the coronavirus pandemic.
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