Money Supply By CBN Surges N119.11 Trillion in April

Nigeria’s broad money supply (M3) soared to an unprecedented N119.11 trillion in April 2025, as revealed by the latest Money and Credit Statistics from the Central Bank of Nigeria (CBN).

This marks a 22.9% increase from N96.97 trillion in April 2024 and a 4.3% rise from N114.22 trillion in March 2025, signifying one of the most pronounced monthly expansions in recent quarters.

This liquidity surge occurs amidst the CBN’s steadfast commitment to a stringent monetary policy.

In May 2025, the Monetary Policy Committee (MPC) decided to maintain the Monetary Policy Rate (MPR) at 27.5%, thereby halting a succession of aggressive rate hikes for the second instance this year.

While inflation slightly eased to 23.71% in April, uncertainties linger regarding whether the prevailing monetary conditions can endure the pressures of burgeoning liquidity without rekindling inflation.

M3, which comprises narrow money (M1), quasi money, and long-term deposits, experienced robust growth propelled by heightened net foreign assets (NFA) and net domestic assets (NDA). Although both factors contributed to the rise, the escalation in foreign assets was particularly striking.

Net foreign assets ascended to N47.76 trillion in April 2025, marking a 66.3% increase from N28.73 trillion a year prior and a 5.7% rise from N45.17 trillion in March 2025. This uptick is indicative of bolstered foreign exchange inflows into Nigeria’s economy, stemming from crude oil sales, multilateral funding, or an increase in diaspora remittances. The CBN’s ongoing exchange rate reforms and measures to stabilize the FX market may be fostering this favorable trend. With enhanced dollar liquidity and rising external reserves, net foreign assets are becoming a predominant driver of the nation’s money supply growth.

Net domestic assets stood at N71.34 trillion in April, up from N69.05 trillion in March and N68.25 trillion in April 2024. This reflects a modest 4.5% year-on-year increase and 3.3% month-on-month. Although the growth is consistent, it appears relatively muted when juxtaposed with the surge in foreign assets. This implies that while domestic assets, likely arising from government borrowing and private sector lending, are expanding, they are not the principal catalyst behind the recent monetary growth.

The restrained pace may also mirror the effect of elevated interest rates on borrowing demand.

M2, which encompasses less liquid instruments than M3 but includes savings and demand deposits, mirrored M3’s trajectory. It rose to N119.08 trillion in April 2025, up 22.8% from N96.96 trillion a year earlier and up 4.3% from N114.20 trillion in March.

The proximity of M2 to M3 suggests that term deposits or other long-term instruments have not witnessed significant movement, keeping liquidity largely short-term.

Narrow money (M1), the most liquid form of currency in the economy, comprising currency in circulation and demand deposits, reached N41.01 trillion in April. This represents a 21.3% increase from N33.82 trillion a year prior and a 6.4% rise from N38.55 trillion in March.

This rise in M1 indicates increased consumer and transactional liquidity. It may reflect intensified economic activity, informal sector cash usage, or seasonal expenditures.

In periods of high inflation, consumers tend to maintain less in savings and more in readily accessible funds, thereby driving up M1.