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Currency-in-circulation fell 7.6 % in January

By on March 30, 2015

Contrary to the fear of unrestrained use of cash in the run up to the general elections, the Central Bank of Nigeria has reported a marginal drop in currency-in-circulation in the month of January this year.

The CBN Economic Review for the month of January, which was made available on the bank’s website last week showed that at the currency-in-circulation which was put at N1,661.7 billion, fell by 7.6 per cent in the review month, in contrast to the increase of 13.9 per cent at the end of the preceding month (December 2014).

The development, according to the report, reflected the 3.4 per cent decline in currency outside bank.
The marginal drop in the level of currency-in-circulation came on the heel of a recent report by the National Bureau of Statistics that put inflation figure for the month of February at 8.4 per cent as against 8.2 per cent in the month of January, as a falling naira keep pushing imported food prices up.

The report also put the total deposits at the CBN during the period at N6, 654.8 billion, indicating a decline of 15.0 per cent below the level at the end of the preceding month. This was attributed to the fall in Federal Government and banks’ deposits, which more than offset the increase in deposit by “others”.

“Of the total deposits, the percentage shares of the Federal Government, banks and “others” were 38.5, 57.3 and 4.2 per cent, respectively.

“Reserve money (RM) fell by 8.2 per cent to N5, 475.6 billion at the end of the review month, reflecting the trends in currency-in-circulation.”

The Economic Report however said there was a relative stability in money market indicators as the level of liquidity in the market influenced key indicators during the review month. The apex bank was said to have continued the use of Open Market Operations (OMO) to pursue its monetary policy objective.

Nigeria annual inflation rate continued to grow to 8.4 per cent in February of 2015 from 8.2 per cent in the previous month, as a falling naira keep pushing imported food prices up.

Imported food prices surged 8.8 per cent, the highest increase since February of 2013. Yet, the naira lost more than 20 per cent to the USD from November to February as declining oil prices and political tensions hurt investor’s confidence. As a result, food cost rose to 9.4 per cent, after remaining at 9.2 per cent in the previous two months.

Additional upward pressures came from: housing, water, electricity and gas (6.5 per cent); clothing and footwear (8.2 per cent); transport prices (7.1 per cent); furnishings and household equipment (8.6 per cent); education (7.4 per cent); health (7.5 per cent); miscellaneous goods and services (7.8 per cent); hotels, cafés and restaurants (8.6 per cent); alcoholic beverages, tobacco and kola (7.9 per cent); communications (3.7 per cent) and recreational and culture (7 per cent).

On a monthly basis, the consumer price index increased by 0.7 per cent, easing from a 0.8 per cent rise in the previous month. As food prices advanced at a slower 0.7 per cent (0.9 per cent in January).

The Economic Report for the month of January, which also provides data on banks assets and liabilities for the month of January, said total assets and liabilities of the commercial banks amounted to N27, 675.8 billion, showing an increase of 1-0 per cent above the level at the end of December 2014. Funds were sourced mainly from draw down on reserves; in foreign assets disposal; unclassified liabilities; and mobilisation of demand deposits.

In a related development, Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.95 million barrels per day (mbd) or 60.45 million barrels for the month of January this year. This was 0.05mbd or 2.6per cent above the average of 1.90 mbd or 58.90 million barrels produced in the preceding month.

The Central Bank of Nigeria (CBN), which disclosed this in its Economic Report for the month of January, added that for the period under review, crude oil export was estimated at 150 mbd or 46.50 million barrels. This represented an increase of 3.5 per cent above the 1.45 mbd recorded in 2014.

The report posted on the CBN’s website last week showed that deliveries to the refineries for domestic consumption remained at 0.45 mbd or 13.95 million barrels during the review month.
It added that at an estimated average of $48.21 per barrel, the price of Nigeria’s reference crude, the Bonny Light (37º  API), fell further by 23.7 per cent below the level in the preceding month.

“The average prices of other competing crudes, namely the West Texas Intermediate at $47.19 per barrel; the UK Brent at $47.46 per barrel; and the Forcados at $48.60 per barrel, also showed similar trends as the Bonny Light,” adding that “The average price of OPEC’s basket of eleven crude streams, at $44.99 per barrel, indicated a decline of 24.3 and 57/0 per cent, compared with the $59.46and US$104.71 per barrel recorded in the preceding month and the corresponding period of 2014, respectively.