{"id":117785,"date":"2025-04-22T17:22:54","date_gmt":"2025-04-22T16:22:54","guid":{"rendered":"https:\/\/pointblanknews.com\/pbn\/?p=117785"},"modified":"2025-04-22T17:22:54","modified_gmt":"2025-04-22T16:22:54","slug":"bank-reserves-hit-n28-5tn-as-currency-in-circulation-falls-to-n5tn","status":"publish","type":"post","link":"https:\/\/pointblanknews.com\/pbn\/news\/bank-reserves-hit-n28-5tn-as-currency-in-circulation-falls-to-n5tn\/","title":{"rendered":"Bank Reserves Hit N28.5tn as Currency in Circulation Falls to N5tn"},"content":{"rendered":"<div>Daniel Adaji<\/div>\n<div><\/div>\n<div>Nigeria\u2019s banking system recorded a liquidity boost in March 2025, as commercial banks\u2019 reserves with the Central Bank of Nigeria (CBN) surged to N28.5tn, up from N27.6tn in February.<\/div>\n<div><\/div>\n<div>The sharp rise reflects the apex bank\u2019s tighter monetary policy and a renewed focus on inflation control.<\/div>\n<div><\/div>\n<div>According to the CBN\u2019s data on Tuesday, this increase in bank reserves coincides with a continuing decline in currency in circulation (CIC)\u2014which fell to N5tn in March. This marks the third consecutive monthly drop in 2025, down from N5.04tn in February and N5.24tn in January.<\/div>\n<div><\/div>\n<div>CIC refers to the physical cash\u2014notes and coins\u2014issued by the central bank that is actively used outside the banking system for transactions. A drop in this figure often signals stronger digital payment adoption or deliberate cash mop-up by the central bank to limit inflation.<\/div>\n<div><\/div>\n<div>The combination of higher bank reserves and lower CIC reflects the CBN\u2019s strategy to rein in inflation, stabilize the naira, and promote financial intermediation.<\/div>\n<div><\/div>\n<div>At its February 2025 Monetary Policy Committee (MPC) meeting, the apex bank raised the Cash Reserve Ratio (CRR) to 50 per cent, compelling banks to hold more of their deposits with the CBN. This move is widely seen as a bold inflation-fighting stance.<\/div>\n<div><\/div>\n<div>Meanwhile, Nigeria\u2019s foreign exchange (FX) reserves dropped to $37.88bn on April 16, marking a four-month low. The figure has steadily declined from over $40.8bn recorded in early January, reflecting increasing pressure on the country\u2019s external balance.<\/div>\n<div><\/div>\n<div>The CBN\u2019s Economic Report for January 2025 revealed that total forex inflows fell to $9.63bn, down from $10.17bn in December 2024\u2014a 5.31 per cent decline. This was largely due to a steep fall in inflows via official channels, which shrank to $2.33bn, from $4.09bn the previous month.<\/div>\n<div><\/div>\n<div>Conversely, autonomous inflows\u2014funds from private investors, exporters, and remittances\u2014increased to $7.31bn, up from $6.08bn. These non-government sources are becoming increasingly critical in sustaining foreign exchange supply.<\/div>\n<div><\/div>\n<div>Despite the FX squeeze, the naira strengthened against the dollar during the same period. At the Nigerian Foreign Exchange Market (NFEM), the average exchange rate appreciated by 1.16 per cent in January, settling at N1,535.94\/USD, and further improved to N1,478.22\/USD by month-end.<\/div>\n<div><\/div>\n<div>The simultaneous rise in bank reserves and drop in CIC points to deliberate liquidity tightening by the CBN. The monetary authority appears to be reinforcing its \u201cDigital First\u201d policy thrust, introduced in December 2023 under Governor Olayemi Cardoso.<\/div>\n<div><\/div>\n<div>In January 2025, the CBN launched a new naira payment platform designed to boost efficiency across government ministries and agencies by reducing transaction turnaround time by 70 per cent. These reforms align with broader efforts to modernize Nigeria\u2019s financial system and reduce reliance on physical cash.<\/div>\n<div><\/div>\n<div>However, challenges remain on the external front. According to the CBN, net foreign exchange inflow fell by 4.49 per cent, from $5.01bn in December to $4.79bn in January. Outflows through the CBN also declined to $3.80bn, while autonomous outflows slightly rose to $1.04bn, resulting in a net CBN outflow of $1.47bn\u2014a steep jump from $0.07bn in December.<\/div>\n<div><\/div>\n<div>PwC has warned that ongoing deportations of Nigerian workers in the U.S. could shrink diaspora remittances and strain Nigeria\u2019s fiscal space. \u201cReduced remittance inflows could put pressure on household spending and Nigeria\u2019s fiscal stability,\u201d the firm noted in a recent outlook.<\/div>\n<div><\/div>\n<div>Even with some gains in the FX market\u2014such as the 18.3 per cent increase in turnover to $408.49m in January\u2014the sustained drop in reserves suggests persistent vulnerabilities that may test Nigeria\u2019s monetary resilience in the months ahead.<\/div>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content --><!-- AddThis Related Posts generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Daniel Adaji Nigeria\u2019s banking system recorded a liquidity boost in March 2025, as commercial banks\u2019 reserves with the Central Bank of Nigeria (CBN) surged to N28.5tn, up from N27.6tn in&hellip;<!-- AddThis Advanced Settings generic via filter on wp_trim_excerpt --><!-- AddThis Share Buttons generic via filter on wp_trim_excerpt --><!-- AddThis Related Posts generic via filter on wp_trim_excerpt --><\/p>\n","protected":false},"author":1,"featured_media":67910,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[5],"tags":[],"class_list":["post-117785","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - 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