Latest data from the Central Bank of Nigeria has indicated that currency outside of bank vaults declined by 0.62 per cent to N3.61tn in April from N3.63tn in the previous month.
This bucks the pattern of steady increase observed since the beginning of the year.
Despite the decline, over 90 per cent of the currency in circulation was still outside bank vaults.
As of April, the currency in circulation stood at N3.92tn, higher than N3.87tn in March.
The currency in circulation has been increasing month-on-month despite the CBN monetary policy tightening, which has seen the benchmark interest rate set at 26.65 per cent.
Also, the latest money and credit statistics data from the CBN showed that Nigeria’s money supply rose to a historic high of N96.97tn in April 2024, reflecting year-on-year growth of 73 per cent from N56.05tn in the same period of the previous year.
On a month-on-month basis, it was a five per cent increase from the previous decline recorded in March at N92.33tn.
This growth comes in the face of the Monetary Policy Committee’s hawkish stance aimed at controlling inflation.
In their statements, one of the members of the Monetary Policy Committee of the CBN at the 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.
“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.”