- Nigeria’s broad money supply increased to N114.22 trillion in March 2025
- Money supply, which excludes institutional investments but includes savings and time deposits, and narrow money, which includes currency in circulation and demand deposits, also increased in March
- The increase in money supply comes amid soaring inflation and a hike in the Cash Reserve Ratio
Data from the Central Bank of Nigeria (CBN) shows that Nigeria’s broad money supply (M3) rose to N114.22 trillion in March 2025, a 24 per cent increase year-on-year from the N92.19 trillion recorded in March 2024.
The CBN data also showed that money supply (M3), which measures the total amount of money in an economy, including net foreign assets (NFA) and net domestic assets (NDA), increased by 3.2 per cent on a month-on-month basis from N110.71 trillion in February.
The increase was largely driven by a rise in net foreign assets (NFA), which soared by 38.9 per cent to N45.17 trillion, an indication of stronger capital inflows and improved external liquidity.
The data also revealed that in the first quarter (Q1) of 2025, M3 increased from N111.11 trillion in January to N114.22 trillion in March, representing a 2.8 per cent quarterly increase.
Foreign assets increased, while domestic assets declined
According to the CBN, net foreign assets increased from N33.19 trillion to N45.17 trillion, representing an N11.98 trillion gain.
Net domestic assets, on the other hand, declined by 11.4 per cent from N77.92 trillion to N69.05 trillion during the period under review.
The decline could be the effect of the liquidity tightening stance of the CBN through open market operations or reduced government borrowing.
The trend of assets growth suggests that Nigeria’s liquidity expansion in Q1 was driven more by foreign inflows than domestic credit growth, with implications for inflation and interest rate policy.
M2 and M1 also increased in March 2025
The data further showed that money supply (M2), which excludes institutional investments but includes savings and time deposits, increased to N114.20 trillion in March, a 24.2 per cent increase year-on-year compared to the N91.95 trillion recorded in March 2024.
Narrow money (M1), which includes currency in circulation and demand deposits, increased to N38.55 trillion, representing a 19.7 per cent year-on-year and 2.2 per cent month-on-month increase from the N37.57 trillion recorded in February 2025.
Increase in money supply comes amid soaring inflation, CRR hike
The recorded increase in money supply in March is amid a surge in the inflation rate despite the rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS).
The NBS stated that Nigeria’s headline inflation rose to 24.23 per cent in March 2025, a 3.90 per cent increase from the 23.18 per cent recorded in February and a 1.05 per cent increase year-on-year.
Money supply also grew in March despite the CBN’s effort to curb excess liquidity by implementing a historically high Cash Reserve Ratio (CRR) of 50 per cent.
The CRR is the apex bank’s way of reducing the amount available for lending and investment by mandating commercial banks to hold a specified percentage of their deposits with the CBN.
A CRR of 50 per cent is the CBN’s measure of withdrawing significant liquidity from the banking system to curb inflationary pressures, which the continued rise in M3 seems to negate.
The rise in the inflation rate and money supply in March 2025 may draw the ire of the Monetary Policy Committee (MPC) of the CBN, which is due for its second meeting of 2025 on May 19 and 20.
The MPC may vote to raise the monetary rates after holding the interest rate at 27.50 per cent and the CRR at 50 per cent at its meeting in February 2025.
Nigeria’s money supply rises to N110.98 trillion in January
Meanwhile, TheRadar earlier reported that Nigeria’s broad money supply (M3), which measures the total amount of money in an economy, increased to N110.98 trillion in January 2025, a 17.3 per cent year-on-year increase from N94.61 trillion recorded in January 2024.
According to the latest credit and monetary statistics released by the Central Bank of Nigeria (CBN), the increase was driven by net foreign assets and net domestic assets.
