Nigeria’s broad money supply has recorded its all-time high N78.74 trillion as of December 2023.
Gatekeepers News reports that this is an increase of N26.58 trillion or 51% year on year when compared to N52.16 trillion recorded in 2022.
This was according to the latest data from the Central Bank of Nigeria (CBN) as contained in its money and credit statistics.
The broad money supply (M3), which is used to measure liquidity in the economy has been on an upward trajectory in recent years and at a rapid pace, comprising net foreign assets and net domestic assets.
In analysing the country’s economic landscape, a critical lens must be cast upon the burgeoning money supply, a key barometer for gauging inflationary trends and interest rate movements.
In recent times, notable swell have been seen in Nigeria’s money supply, which aligns with various economic challenges. Prominent among these are the escalating inflation rates, mounting pressures on the naira’s exchange value, and a downtrend in interest rates.
This increase in the money supply signals a probable escalation in inflation, which could erode Nigerians’ purchasing power.
In addition to this, an inflated money supply often correlates with diminished interest rates, especially in scenarios marked by a scarcity of viable investment opportunities.
Meanwhile, this dynamic could potentially render Nigerian investment instruments less appealing to international investors, which is a critical concern because of the country’s desire for dollar inflows, which has declined significantly.
