Money Supply Records First Decline in 2025, Falls to N110 Trillion
- In 2025, the Nigerian money supply had its first decline, falling from N110.94 trillion in January to N110.32 trillion in February
- The top bank's continuous efforts to manage systemic liquidity are in accordance with the monthly fall of 0.56%
- In February 2024, the money supply was N95.56 trillion, up 15.45% from the previous year
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Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
The Central Bank of Nigeria has shown that the money supply in Nigeria had its first decrease in 2025, dropping from N110.94 trillion in January to N110.32 trillion in February.
Source: UGC
The 0.56% monthly decline coincides with the top bank's ongoing attempts to control systemic liquidity in the wake of previous indications of monetary tightening and foreign exchange adjustments.
The money supply in February 2024 was N95.56 trillion, representing a 15.45% year-over-year increase. The increase in M3 money supply, which incorporates both net foreign assets and net domestic assets, offers a more comprehensive picture of the nation's monetary dynamics, even with the slight slowdown.
The modest February decrease is indicative of changes in both domestic credit and foreign reserves.
Net foreign assets decreased by 8.62% to N32.34 trillion in February from N35.39 trillion in January, according to a closer look at the underlying factors.
This is a decrease of more than N3 trillion and might be attributed to either a decrease in external reserves or a rise in the central bank's foreign exchange operations meant to stabilize the naira.
On the other hand, net domestic assets increased 3.21 percent from N75.55 trillion in January to N77.97 trillion in February, indicating that credit is still growing in the local economy.
Net foreign assets increased by more than 337 percent year over year from N7.41 trillion in February 2024. The growth is a result of both higher foreign inflows and exchange rate reforms.
During the same period, net domestic assets decreased marginally from N88.15 trillion, which can indicate a reallocation within the financial system brought on by shifting policy priorities.
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The broad money supply, as measured by M2, also slightly decreased in February, falling from N110.93 trillion in January to N110.31 trillion.
The decline of 0.56% is consistent with the pattern shown in M3. On an annual basis, however, M2 increased 17.39% from N93.97 trillion in February of the previous year.
According to the data, the money supply has expanded more broadly over the last 12 months, which is in line with higher government spending and other fiscal policies.
On the other hand, February saw an increase in the narrow money supply, which comprises demand deposits and currency in circulation. The number increased by 2.18 percent to N37.57 trillion from N36.77 trillion in January.
This represents a growth rate of 24.07% when compared to February 2024, when narrow money was valued at N30.28 trillion.
Higher transactional demand for cash and short-term liquidity requirements in the face of persistent inflationary pressures and currency volatility could be the cause of the increase.
Despite the increase in narrow money and net domestic assets, the overall money supply has decreased, which points to a change in the liquidity structure.
Even while domestic credit conditions are solid, M3 seems to have been significantly impacted by the decline in net foreign assets.
The notable increase in foreign assets over the previous year now seems to be leveling off, whether as a result of stabilizing inflows or the impact of the CBN's foreign exchange market operations.
Source: Getty Images
The Punch reported that the modest decrease in February's money supply may provide the CBN with some leeway to adjust its policy instruments, given that inflation is still high and the naira is exhibiting signs of stability.
As the central bank continues to strike a careful balance between controlling inflation and promoting economic growth, the most recent data is anticipated to influence discussions at the upcoming meeting of the Monetary Policy Committee.
CBN releases new data on money supply
Legit.ng reported that the Central Bank of Nigeria has revealed that Nigeria’s broad Money Supply (M²) has increased to 110.97 trillion in January 2024.
The December figure is a significant rise when compared to N93.77 trillion in the corresponding period of 2024.
CBN disclosed the figures in its latest money and credit statistics data on its website.
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Source: Legit.ng
