Naira scarcity to persist as CBN mops up currency in circulation

As Nigerians battle with Naira scarcity, the Central Bank of Nigeria (CBN) continues to mop up currency in circulation, leaving the economy with N982.09 billion, according to data obtained from the financial regulator on Sunday.

At the end of October 2022, Naira in circulation was N3.29 trillion before the CBN began its Naira redesign policy, which resulted in the scarcity of banknotes.

In the last week of October, CBN Governor, Godwin Emefiele announced that the CBN would begin to mop up the funds to reduce the amount of cash in circulation.

Part of its strategy to reduce cash in circulation includes redesigning the old N200, N500 and N1,000 notes, with the new banknotes released in December 2022, while the old notes were phased out on 10 February 2023.

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Despite the Supreme Court’s ruling on February 8, 15 and 22, that the old Naira notes remain legal, the central bank continued to mop up the old Naira in circulation, removing N2.3 trillion from circulation between October 2022 and February 2023, while printing less new notes.

This was one of the factors that extended the scarcity of the Naira and have also prolonged it into March despite the Supreme Court judgement on March 3, 2023, that the old Naira remain legal until December 31, 2023.

Between October last year and February 2023, the cash in circulation dropped by 70.14 per cent to N982.09 billion from N3.29 trillion.

With the cash in circulation dropping and the currency in commercial banks’ vaults or that of the CBN rising, Nigerians can still not access money deposited in their accounts despite the ruling that the new and old notes should co-exist for 10 months.