BUSINESS
CBN: Currency in circulation declines to N1.77trn in July
The Nigerian currency in circulation has recorded a decline of 5.6 per cent to N1.77 trillion in July 2017, latest Central Bank of Nigeria (CBN) has revealed. The Naira in circulation continued to drop in 2017 following the apex Bank intensive effort to mop liquidity in the economy to reduce inflation and sustain its stability.
Naira in circulation according to CBN in June was N1.87 trillion from N1.897 trillion reported in May this year while it was at N1.98 trillion in April. CBN early in the year disclosed that currency in circulation was N1.99 trillion, the highest so far this year and Inflation rate by National Bureau of Statistics (NBS) has since dropped to 16.1 per cent as at June from 18.72 per cent in January.
Before now, the CBN said N2.2trillion currency was in circulation for month ended December 2016, increase of about 14.3 per cent from N1.9 trillion reported by CBN in November.
Naira in circulation started increasing from July to N1.66 trillion as against N1.68 trillion recorded in August the prior year.
Meanwhile, according to FMDQ OTC report, transaction turnover in the Nigeria’s fixed income and currency markets have increased by a total sum of N3.13 trillion in June while compared to the value recorded in the preceding month.
The report specifically indicates that the treasury bills (T-bills) segment of the fixed income market continued its dominance the market in the month of June 2017 accounting for 43.22 percent, against 40.73 per cent recorded in May while FGN2 bonds recorded 6.22 percent compare to 5.23 per cent in May of total turnover in June.
Turnover in the fixed income market generally, in the month under review, settled at N6.24 trillion, representing a 43.03 percent (N1.87trn) month-on-month increase. Transactions in the T-bills market accounted for 87.41% of the Fixed Income market, from 88.67 percent the previous month.
Outstanding T-bills at the end of the month stood at N8.51 trillion, a decrease of 3.98 percent month-on-month (N8.87trn in May), whilst FGN bonds’ outstanding value increased by 1.44 percent (N0.09trn) month-on-month to close at N7.03 trillion in the period under review.
The trading intensity in the fixed income market for the month under review settled at 0.62 and 0.11 for T-bills and FGN bonds respectively, from 0.43 and 0.07 recorded for the previous month. Maturities up to one month became the most actively traded, accounting for the turnover of N1.65 trillion in June.
On the other hand, activities in the secured money market (Repos/Buy-Backs) settled at ₦3.51 trillion in June, 34.28 percent (N0.89trn) more than the value recorded in May. On a year-on-year basis, turnover on repos/buy-backs recorded a 26.34 percent (N0.76trn) increase.
Unsecured placements/takings closed the month at a turnover of N0.13 trillion, a decline of 8.91 percent (N0.01trn) month-on-month and 66.74 percent (N0.26trn) year-on-year.
The dominance of the T-bills segment of the market is attributed to high yields and the relative risk in the investments.
However, Analysts at Cordros Capital, has said, “We expect the Naira currency to remain unchanged or slightly depreciate against the currencies we track this week, given the increased demand for foreign exchange this season, albeit, the intervention by the CBN should reduce imbalances.”
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