Nigeria’s broad money supply has increased to N114.22
trillion in March 2025, defying the Central Bank of Nigeria’s monetary policy
tightening in the last quarter.
This is 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 when compared to
N92.19 trillion recorded in the same month of 2024, despite the CBN Monetary
Policy Committee pegging the country’s Cash Reserve Ratio at 50 percent.
On a month-on-month basis, the figure also rose by 3.2
percent from N110.71 trillion in February.
The increase comes amid a sharp rise in net foreign assets,
which rose by 38.9 percent to N45.17 trillion, which portends stronger capital
inflows on the back of possible revaluation gains.
Meanwhile, in contrast, net domestic assets declined by 11.7
percent to N69.05 trillion, reflecting tighter liquidity within the domestic
financial system.
Despite efforts to reduce inflation, which stood at 24.23
percent in March, and control liquidity through the imposition of the highest
CRR in the world, Nigeria’s monetary base continued to surge.
The rise in broad money supply may be due to foreign asset
holdings and government credit.
In the first quarter of the year, M3 grew by 2.8 percent,
from N111.11 trillion in January to N114.22 trillion in March.
The CBN data indicated that the volume of currency
circulating outside the banking system rose to N4.6 trillion in March, out of a
total currency in circulation of N5 trillion.
The implication is that 91.9 percent of all cash in the
economy was held outside the banks.
It further represents a 26.7 percent increase compared to
N3.63 trillion held outside the banks in March 2024, when total currency in
circulation stood at N3.87 trillion.
The increased demand for cash has remained consistent
throughout the first quarter of 2025, with January figures showing N4.74
trillion in cash outside banks (90.5 percent of total) and N4.52 trillion in
February (89.6 percent of total).
Recall that in February 2025, the MPC retained the interest
rate at 27.50 percent and retained the Cash Reserve Ratio (CRR) at 50 basis
points and other variables.
The apex bank is billed to hold its next MPC meeting on May
19 and 20, 2025.
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