Currency-in-circulation Rises to N1.811 Trillion

Obinna Chima

The value of currency-in-circulation increased year-on-year to N1.811 trillion at the end of March 2016, compared with the N1.712 trillion it was at the end of February.

This was revealed by the Central Bank of Nigeria’s (CBN) money and credit statistics for March 2016.
The data however showed that banking sector credit to the private sector decreased slightly year-on-year to N18.882 trillion at the end of March, compared with the N18.990 trillion it stood the previous month.

The central bank data also revealed that broad money (M2), which generally is made up of demand deposits at commercial banks and monies held in easily accessible accounts fell marginally year-on-year from N20.489 trillion as at February, to N20.470 trillion at the end of March.

Similarly, narrow money (M1), which includes all physical monies such as coins and currency along with demand deposits and other assets held by the central bank reduced year-on-year to N9.041  trillion in the review month, as against the N9.059 trillion recorded the previous month.

But currency outside banks increased from N1.377 trillion in February, to N1.441 trillion as at the end of March.
The central bank data showed that the total amount of banks’ reserves with the central bank increased from N3.384 trillion the previous month, to N3.947 trillion.

But demand deposits, which are funds held in an account from which deposited funds can be withdrawn at any time without any advance notice to the depository institution fell from N7.682 trillion in February, to N7.599 trillion in the month under review.

The latest central bank’s money and credit statistics also revealed that quasi money, which is made up of highly liquid assets that can easily be converted to cash did not move as it maintained its previous month’s value of N11.429 trillion.

The Monetary Policy Committee (MPC) of the central bank is expected to meet this month and the money and credit statistics would be part of the data to be considered in taking its decision.

At its last meeting in March, the MPC raised the Monetary Policy Rate (MPR) otherwise known as the interest rate, to 12 per cent from 11 per cent. It also increased bank’s Cash Reserve Ratio (CRR) to 22.5 per cent from 20 per cent, in a move aimed at tightening liquidity, which the central bank blamed for the current pressure in the foreign exchange market with a strong pass-through to consumer prices.

Inflation in the country rose to 12.77 per cent last month. The MPC had also kept liquidity ratio unchanged at 30 per cent, and further resolved to narrow the asymmetric corridor around the MPR from +200 and -700 basis points to +200 and -500 basis points respectively.

Nigeria’s Manufacturing Purchasing Managers’ Index (PMI) dropped to 43.7 per cent in April 2016, compared to 45.9 per cent in the preceding month. This implied that the manufacturing sector declined at a faster rate during the review period.

The PMI report for April 2016 posted on the Central Bank of Nigeria’s (CBN) website, of the 16 manufacturing sub-sectors, 12 recorded decline in the review month in the following order: furniture and related products; paper products; primary metal; electrical equipment; computer and electronic products; printing and related support activities; fabricated metal products; plastics & rubber products; textile, apparel, leather and footwear; petroleum and coal products; chemical and pharmaceutical products and food, beverage & tobacco products. The remaining four sub-sectors however recorded expansion in the following order: appliances and components; cement; nonmetallic mineral products and transportation equipment.