Nigeria’s broad cash provide declined for the second time this yr, falling barely to N119.01 trillion in Might 2025, in response to recent information from the Central Bank of Nigeria (CBN).
The drop represents a month-on-month contraction of N292.75 billion or 0.25% from the N119.30 trillion recorded in April.
The primary decline of 2025 was recorded in February, when the determine dropped to N110.32 trillion from N110.94 trillion in January.
Regardless of the slight decline, the cash provide stays close to report highs, reflecting the residual results of earlier liquidity surges and ongoing changes in financial coverage.
Yr-on-year, the expansion is much more hanging — cash provide expanded by N19.77 trillion, up from N99.24 trillion in Might 2024. This marks a pointy 19.9% enhance and highlights the dimensions of financial growth that has occurred over the previous 12 months.
Overseas belongings down, home belongings up
A more in-depth have a look at the parts of broad cash (M3) reveals a notable shift in liquidity sources. In April, the surge in cash provide was pushed largely by larger internet international belongings, which stood at N49.87 trillion. Nonetheless, by Might, this determine had dropped sharply to N45.81 trillion, a fall of N4.05 trillion or 8.1%. The contraction means that Nigeria’s exterior asset place weakened, presumably because of the decline within the FX reserves.
- On the identical time, internet home belongings elevated considerably to N73.19 trillion in Might, up from N69.43 trillion in April, an increase of N3.76 trillion or 5.4%. This enhance partially offset the autumn in exterior belongings and prevented a steeper decline in complete cash provide.
- This interaction between home and international asset actions illustrates the fragile balancing act the CBN is managing: injecting or mopping up liquidity whereas sustaining FX stability and curbing inflation.
M2 and slender cash additionally decline
- Nigeria’s cash provide (M2), a narrower gauge of liquidity that excludes sure institutional holdings, additionally recorded a marginal dip. It fell to N118.99 trillion in Might, in comparison with N119.28 trillion in April, a contraction of N283 billion or 0.24%. The decline mirrored the pattern in M3 and suggests a broader tightening in financial situations.
- Slim cash (M1), which captures probably the most liquid belongings corresponding to foreign money in circulation and demand deposits, additionally declined. It fell from N41.00 trillion in April to N40.38 trillion in Might, a drop of N624.5 billion or 1.5%.
- The discount in M1 factors to diminished money availability, presumably pushed by diminished authorities spending, larger rates of interest, or seasonal shifts in liquidity demand.
- Regardless of the month-to-month decline, M1 stays elevated in comparison with the identical interval final yr. In Might 2024, slender cash was simply N33.38 trillion, which means the Might 2025 determine displays a 20.9% annual enhance. This exhibits that regardless of latest contractions, liquidity within the economic system stays excessive by historic requirements.
What you must know
The year-on-year numbers supply a broader perspective on Nigeria’s financial developments. Complete cash provide (M3) rose by almost N20 trillion between Might 2024 and Might 2025, a rise of 19.9%.
The soar was largely fuelled by an enchancment within the nation’s international asset base. Internet international belongings grew from N15.34 trillion in Might 2024 to N45.81 trillion in Might 2025, a rise of over N30 trillion or 198%.
This progress in international belongings seemingly displays the buildup of FX reserves, elevated oil receipts, and improved exterior financing situations following debt issuances and coverage reforms. Nonetheless, the image isn’t completely optimistic.
Over the identical interval, internet home belongings really declined from N83.90 trillion to N73.19 trillion, a drop of N10.71 trillion or 12.8%. This means that home liquidity — pushed by bank credit score, authorities borrowing, and CBN’s internet claims — could have tightened, presumably as a part of broader efforts to rein in inflation.
The CBN’s latest financial tightening — together with the excessive Financial Coverage Price (MPR) and extra aggressive use of Open Market Operations (OMO) — is beginning to mirror within the information. The Might decline in cash provide, notably in probably the most liquid parts like M1, factors to early success in efforts to scale back extra liquidity and tame inflationary pressures.
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