Nigeria’s money supply hits N114tn despite CBN’s policy

Nigerias broad money supply rose to N114.22 trillion in March 2025, despite the Central Bank of Nigerias monetary policy tightening in the previous quarter. According to the latest money and credit statistics released by the apex bank for the first quarter of 2025, the figure represents a 24 percent increase compared to N92.19 trillion recorded in March 2024, despite the CBN Monetary Policy Committee setting the Cash Reserve Ratio at 50 percent. On a month-to-month basis, the money supply grew by 3.2 percent from N110.71 trillion in February. This surge occurred alongside a sharp increase in net foreign assets, which rose by 38.9 percent to N45.17 trillion, suggesting stronger capital inflows potentially due to revaluation gains. In contrast, net domestic assets declined by 11.7 percent to N69.05 trillion, indicating tighter liquidity within the domestic financial system. Despite measures to curb inflationrecorded at 24.23 percent in Marchand to control liquidity through the imposition of what is considered the highest CRR in the world, Nigerias monetary base continued to expand. The rise in broad money supply may be attributed to foreign asset accumulation and government credit. In the first quarter of 2025, M3 grew by 2.8 percent, rising from N111.11 trillion in January to N114.22 trillion in March. CBN data also showed that the volume of currency circulating outside the banking system increased to N4.6 trillion in March, out of a total currency in circulation of N5 trillion, meaning that 91.9 percent of cash in the economy was held outside the banks. This marks a 26.7 percent increase compared to the N3.63 trillion held outside the banks in March 2024, when the total currency in circulation stood at N3.87 trillion. The demand for physical cash remained high throughout the first quarter of 2025, with N4.74 trillion held outside the banks in January (90.5 percent of total), and N4.52 trillion in February (89.6 percent of total). In February 2025, the MPC retained the interest rate at 27.50 percent and maintained the Cash Reserve Ratio at 50 percent along with other monetary variables.The Central Bank is scheduled to hold its next MPC meeting on May 19 and 20, 2025. The post Nigerias money supply hits N114tn despite CBNs policy appeared first on Linda Ikeji Blog.