Business a.m
The latest figures from the Central Bank of Nigeria (CBN) has indicated that the country’s broad money supply has reached a historic high of N93.72 trillion as of January 2024. This represents a significant increase of N40.48 trillion, or 76 per cent, from the figure of N53.14 trillion recorded in January 2023.
A comparison of the January 2024 figure with that of December 2023, which stood at N78.74 trillion, shows a significant increase of 19% or N14.98 trillion.
The most recent data from the CBN, which provides a comprehensive overview of the changes taking place in Nigeria’s monetary landscape, also made a comparison of the January 2024 figure with that of December 2023, which stood at N78.74 trillion, showing a significant increase of 19 per cent or N14.98 trillion.
As a crucial gauge of economic liquidity, the broad money supply (M3) of Nigeria has been on a steady incline in recent years, gaining momentum at a faster rate than ever before.
Recent trends in Nigeria’s money stock have revealed a pronounced expansion, a trend that coincides with various economic challenges currently facing the country. Inflation rates have been on the rise, placing pressure on the value of the naira and lowering interest rates. According to analysts, these challenges have the potential to undermine the stability of the economy, making it essential to keep a close watch on the growth of the money stock.
There are indications that the expanding money supply in Nigeria may lead to higher inflation, which can erode the purchasing power of Nigerian citizens. Inflation is often associated with a decline in interest rates, as investors are discouraged from investing their money when prices are rising rapidly. This is particularly true in environments where there are few attractive investment options, as investors may perceive a higher risk in the economy and seek safer alternatives.
Financial analyses have also shown that the downward trend in interest rates resulting from a growing money stock may also make Nigerian investment options less appealing to global investors. This is a significant concern for Nigeria, as foreign investment is critical to maintaining a steady flow of dollars into the country. This is as the naira’s value is highly dependent on the supply of foreign exchange, and any reduction in foreign investment could lead to a further decline in the currency’s value.
