Money supply drops to N119.01trn in May 2025, says CBN

The Central Bank of Nigeria (CBN) disclosed on Monday that Nigeria’s broad money supply declined for the second time this year, falling slightly to N119.01 trillion in May 2025.

The drop represents a month-on-month contraction of N292.75 billion or 0.25per cent from the N119.30 trillion recorded in April.

The first decline of 2025 was recorded in February, when the figure dropped to N110.32 trillion from N110.94 trillion in January.

Despite the slight decline, the money supply remains near record highs, reflecting the residual effects of earlier liquidity surges and ongoing adjustments in monetary policy.

Year-on-year, the growth is even more striking — money supply expanded by N19.77 trillion, up from N99.24 trillion in May 2024. This marks a sharp 19.9per cent increase and highlights the scale of monetary expansion that has occurred over the past 12 months.

A closer look at the components of broad money (M3) reveals a notable shift in liquidity sources. In April, the surge in money supply was driven largely by higher net foreign assets, which stood at N49.87 trillion. However, by May, this figure had dropped sharply to N45.81 trillion, a fall of N4.05 trillion or 8.1per cent. The contraction suggests that Nigeria’s external asset position weakened, possibly due to the decline in the FX reserves.

At the same time, net domestic assets increased significantly to N73.19 trillion in May, up from N69.43 trillion in April, a rise of N3.76 trillion or 5.4per cent. This increase partially offset the fall in external assets and prevented a steeper decline in total money supply.

This interplay between domestic and foreign asset movements illustrates the delicate balancing act the CBN is managing: injecting or mopping up liquidity while maintaining FX stability and curbing inflation.

Nigeria’s money supply (M2), a narrower gauge of liquidity that excludes certain institutional holdings, also recorded a marginal dip. It fell to N118.99 trillion in May, compared to N119.28 trillion in April, a contraction of N283 billion or 0.24per cent. The decline mirrored the trend in M3 and suggests a broader tightening in monetary conditions.

Narrow money (M1), which captures the most liquid assets such as currency in circulation and demand deposits, also declined. It fell from N41.00 trillion in April to N40.38 trillion in May, a drop of N624.5 billion or 1.5per cent.

The reduction in M1 points to reduced cash availability, possibly driven by reduced government spending, higher interest rates, or seasonal shifts in liquidity demand.

Despite the monthly decline, M1 remains elevated compared to the same period last year. In May 2024, narrow money was just N33.38 trillion, meaning the May 2025 figure reflects a 20.9per cent annual increase. This shows that despite recent contractions, liquidity in the economy remains high by historical standards.