– Currency outside banks surge by 44.46% in January
Lagos — Recent data from the Central Bank of Nigeria (CBN) show that the Nigerian domestic currency – the Naira strengthened against major currencies in February 2025 at the official market. The Naira appreciated month-on-month by 2.33% against the US dollar, averaging ₦1,500.97 per dollar in February compared to ₦1,535.95 in January 2025.
Similarly, the Naira strengthened by 1.82% against the Euro, averaging ₦1562.35 from ₦1590.72 and by 0.65% against the Pounds sterling, averaging ₦1882.0 in February 2025 from an average of ₦1894.2 in January 2025.
This upward trend comes on the heels of a series of strategic policies implemented by the CBN to stabilize and strengthen the domestic currency.
These key measures include the introduction of the Electronic Foreign Exchange Matching System (launched on December 2, 2024), the Nigeria Foreign Exchange Code (January 28, 2025) and selective intervention in the foreign exchange market.
To sustain and build on this momentum, further efforts are needed. Other policies that would further strengthen the Naira include support of local businesses to produce substitutes for imports, through improved access to credit and technology.
Additionally, critical investments in the health and education sectors are essential to reduce the demand for foreign services, such as medical and health tourism.
Currency Outside Banks Surge by 44.46% in January 2025
Meanwhile, according to the latest data from the Money and Credit statistics of the Central Bank of Nigeria (CBN), currency outside banks soared year-on-year by 44.46%, to ₦4.7 trillion by January 2025 up from ₦3.3 trillion in January 2024. Currency outside the bank represents 12.8% of narrow money in January 2025, an increase from 10.4% in January 2024.
Also, currency outside banks as a percentage of total money supply (M3) increased in January 2025 to 4.3% from 3.5% last year. The statistics suggest a growing preference for cash-based payments and an expansion of the informal economy.
Moreover, an increase in the proportion of currency circulating outside banks impedes the transmission of monetary policy signals through interest rate adjustments, which is critical for the effectiveness of monetary policies.
To address this pressing issue, urgent corrective measures need to be implemented. These measures could include reducing bank charges to incentivize greater participation in the formal banking system, expanding banking infrastructure, especially in underserved areas, and strengthening mechanisms for addressing payment failures associated with interruptions in internet services.
