Despite the hawkish monetary policy stance of the Central Bank of Nigeria (CBN) to tame the surging inflation rate in the economy, Nigeria’s broad money supply rose to N114.22 trillion in March this year, representing 3.2% increase from the N110.71 trillion supplied in February 2025.
The month-on-month increase was recorded as the apex sustained its monetary tightening measures, including the raising of deposit money banks’ (DMBs’) Cash Reserve Ratio to an all-time high of 50% at the last meeting of its Monetary Policy Committee (MPC).
When analyzed on a year-on-year basis, the broad money supply in March this year represented 24% surge when compared to N92.19 trillion recorded in the corresponding month of last year.
The latest report by the CBN on the money supply in the month under review reflected that the increase was due to a sharp rise in net foreign assets, which rose by 38.9% to N45.17 trillion, showing stronger capital inflows and possible revaluation gains.
Conversely, net domestic assets dropped by 11.7% to N69.05 trillion, which showed that the apex bank’s measures to control liquidity within the domestic financial system was yielding the desired results.
The data from the CBN’s latest report reflected that in the first quarter of the year, M3 grew by 2.8% from N111.11 trillion in January to N114.22 trillion in March, while the currency in circulation outside the banking system surged to N4.6 trillion in March, representing 91.9% of a total currency in circulation totalling N5.00 trillion.
On a year-on-year basis, the currency in circulation outside the banks’ coffers in the month under review rose by 26.7% when compared to N3.63 trillion held outside the banks in March 2024, when total currency in circulation stood at N3.87tn.
A further analysis of the figures showed that in January N4.74 trillion was the cash outside banks, representing 90.5% of total currency in circulation, while in February it slightly dropped to N4.52 trillion or 89.6% of total banknotes in circulation.
The CBN data indicated a parallel growth in other monetary aggregates. For instance, M2, which includes savings and time deposits but excludes institutional holdings, increased to N114.20 trillion in March this year compared to N91.95 trillion in the corresponding month of 2024.
Similarly, Narrow money (M1), which includes currency and demand deposits, also rose to N38.55 trillion in March this year, up by 19.7% year-on-year.
Experts believe that the rising broad money supply is partly due to external factors, especially the growing foreign asset holdings and government credit, which are undermining the apex bank’s monetary tightening measures.
