The Central Bank of Nigeria says lower-denomination naira notes are currently scarce due to growing adoption of digital payments and changing currency demand.

The Governor of the CBN, Olayemi Cardoso, spoke on Tuesday after the monetary policy committee meeting in Abuja.

Cardoso said the scarcity does not mean the naira notes have ceased to be legal tender.

The CBN governor said Nigerians should continue to accept the N100 and N200 notes, adding that the apex bank had not withdrawn any denomination from circulation.

“Yes, they remain legal tender. Unless the central bank states otherwise, Nigerians should assume that all existing denominations remain legal tender,” Cardoso said.

“As to why there appear to be fewer of these notes in circulation, it is largely a matter of demand and supply. The financial ecosystem is evolving in the direction we want it to, with greater financial inclusion and increased digitisation.”

“As more people adopt digital payment channels, the demand for coins and lower-denomination notes naturally declines. If there is less demand for them, there is less need to print and circulate them in large quantities.”

He also said the declining purchasing power of lower-value notes has contributed to their reduced use.

“Of course, we must also acknowledge that currency devaluation has affected the purchasing power of lower-value notes. That is a reality,” he said.

“More importantly, however, as financial inclusion expands and digital payments become part of everyday life, fewer people will rely on these denominations.”

On inflation, Cardoso said the apex bank remains committed to achieving single-digit inflation despite external shocks that have slowed the pace of disinflation.

“It is important to remember where we are coming from. We recorded 11 consecutive months of disinflation and, from every indication, we expected that by early 2027 we would be where we wanted to be in terms of inflation, with a path towards single-digit inflation,” he said.

“Unfortunately, we have experienced external shocks that were not anticipated and have lasted much longer than anyone expected.”

“As for our single-digit inflation target, we remain committed to it.”

Responding to the International Monetary Fund’s (IMF) recent assessment that the naira is undervalued, with a fair value of about N1,150 to the dollar, Cardoso reiterated that the exchange rate should be determined by market fundamentals rather than a fixed target.

“Our position remains the same,” he said.

“We will continue to ensure that Nigeria has a foreign exchange market that is transparent, liquid and based on a willing-buyer, willing-seller framework.”

“Where the exchange rate eventually settles depends on market fundamentals. It is influenced by factors such as oil exports, foreign direct investment, domestic productivity and import substitution.”

Cardoso also said the CBN is satisfied with the current state of the foreign exchange market, adding that the country now “have a functional, transparent and open market, on some days, market turnover exceeds $1 billion, reflecting growing confidence”.