Nigeria’s broad money supply has climbed to a historic high of ₦122.95 trillion, highlighting the continued expansion of liquidity in the economy even as the Central Bank of Nigeria (CBN) maintains an aggressive monetary tightening stance to curb inflation and stabilise the foreign exchange market.
Latest data from the apex bank show that broad money (M3) rose by 12.8 per cent year-on-year in November 2025, representing an increase of ₦13.98 trillion from ₦108.97 trillion recorded in November 2024. The figures underscore the scale of liquidity growth over the past year despite repeated interest rate hikes and other contractionary policy measures.
On a month-on-month basis, money supply also expanded sharply. M3 increased by ₦3.9 trillion, or 3.3 per cent, from ₦119.03 trillion in October 2025 to its November level, pointing to sustained liquidity build-up toward the end of the year.
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Explaining the trend, Tilewa Adebajo, chief executive officer of CFG Advisory, attributed the rise in money supply to a mix of external and domestic factors. He said improvements in the external sector have played a key role, with the CBN’s Monetary Policy Committee noting a surplus current account balance and steady accretion to foreign reserves. These inflows, he explained, have supported exchange rate stability and moderated inflationary pressures, while also expanding naira liquidity as foreign currency earnings are converted.
Adebajo also pointed to balance sheet expansion within the domestic economy, noting that broad money typically grows alongside domestic credit, including government borrowing, particularly when liquidity is not fully sterilised by the central bank. Exchange rate valuation effects, he added, have further boosted naira-denominated money supply, as adjustments in the exchange rate revalue foreign-currency assets held within the financial system.
Seasonal factors linked to year-end economic activity also contributed to the increase. Higher transaction demand from payments, inventory stocking and general business activity often leads to temporary rises in bank deposits and currency in circulation, pushing up measured money supply.
On the implications, Adebajo cautioned that rapid growth in broad money could pose risks to the inflation outlook if it continues to outpace real output growth. Although headline inflation eased to 14.45 per cent in November 2025, he warned that sustained liquidity expansion could slow the pace of disinflation by adding demand-side pressures.
He noted that the CBN’s efforts to contain liquidity through open market operations and other tightening tools could keep interest rates elevated, translating into higher borrowing costs for businesses and households.
The impact on the exchange rate, he said, would depend on the underlying drivers of money supply growth. Expansion supported by genuine foreign exchange inflows and stronger external buffers could help sustain currency stability. However, liquidity driven mainly by domestic creation without matching FX supply could increase dollar demand and renew pressure on the naira.
While rising liquidity has the potential to support economic growth, Adebajo stressed that its composition matters. Productive credit to the private sector can stimulate investment and output, but excessive public sector borrowing risks crowding out private investment and weakening credit quality.
Analysts say key indicators to watch in the coming months include trends in foreign reserves and net FX inflows, the balance between government and private sector credit, the intensity of the CBN’s liquidity sterilisation efforts, and the trajectory of inflation expectations, particularly food prices and other FX-sensitive components.
