Despite the Central Bank of Nigeria’s monetary policy tightening in the previous quarter, Nigeria’s broad money supply grew to N114.22 trillion in March 2025.
The apex bank’s most recent money and credit data for the first quarter of 2025 support this.
Even though the CBN Monetary Policy Committee set the nation’s Cash Reserve Ratio at 50%, the amount is a 24% rise over the N92.19 trillion recorded in the same month of 2024.
The amount also increased by 3.2% month over month from N110.71 trillion in February.
The increase coincides with a sharp increase in net foreign assets, which increased by 38.9 percent to N45.17 trillion, indicating that potential revaluation gains will likely lead to stronger capital inflows.
Conversely, the domestic banking system’s tighter liquidity was reflected in the 11.7 percent fall in net domestic assets to N69.05 trillion.
Nigeria’s monetary base continues to rise in spite of measures to contain liquidity by imposing the highest CRR in the world and lower inflation, which was 24.23 percent in March.
The surge in broad money supply may be related to overseas asset holdings and government loans.
M3 increased by 2.8 percent in the first quarter of this year, from N111.11 trillion in January to N114.22 trillion in March.
Out of the N5 trillion in total cash in circulation, the amount of money moving outside of the banking system increased to N4.6 trillion in March, according to CBN statistics.
This suggests that 91.9 percent of the economy’s total cash was kept outside of banks.
Additionally, compared to N3.63 trillion kept outside of banks in March 2024, when the total amount of cash in circulation was N3.87 trillion, it represents a 26.7 percent rise.
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The first quarter of 2025 has seen a steady increase in the demand for cash, with January figures showing N4.74 trillion in cash outside banks (90.5 percent of total) and February figures showing N4.52 trillion (89.6 percent of total).
Recall that in February 2025, the MPC held the interest rate at 27.50 percent and retained the Cash Reserve Ratio (CRR) at 50 basis points and other factors.
The apex bank is expected to convene its next MPC meeting on May 19 and 20, 2025.
