Money supply hits record high of N106trn in July

…Currency in circulation jumps by 56.18% in one year

…Money outside banks drops by 65.61%

…Credit to government declined 31,19%

… Loans to private sector rise to N75.48trn

The money supply (M3), which is a broad measure of the total amount of money in an economy, has reached an all-time high of N106.27 trillion in July 2024, despite the tightening measures of the Central Bank of Nigeria (CBN).

Data from the CBN showed that M3 rose to a record high of N106.27 trillion in July 2024. This represents a 62.66 percent increase to N65.33 trillion recorded in the corresponding period of July 2023.

On a month-on-month basis, the M3 increased by 4.74 percent from N101.46 million in June 2023, according to the data.

When the money supply increases, it can lead to higher inflation. As more money chases the same amount of goods and services, prices tend to rise. This means that households might face higher costs for everyday items, reducing their purchasing power, analysts said.

The apex bank has used monetary tools such as Open Market Operation (OMO), treasury bills and the Monetary Policy Rate (MPR) to fight rising inflationary pressure.

At its last Monetary Policy Committee (MPC) meeting in July 2024, the CBN raised the MPR by 50 basis points to 26.75 percent from 26.25 in June 2024.

The banking and financial sector regulator on Tuesday announced its plan to issue N2.20 trillion in treasury bills during the fourth quarter of 2024, matching the amount set to mature from September to November this year.

A recent analysis reveals that under the leadership of Governor Olayemi Cardoso, the Central Bank of Nigeria has issued a substantial amount of N1.5 trillion in Open Market Operation (OMO) bills.

Currency in circulation jumps by 56.18% in one year

Currency in circulation (CIC) jumped to N4.053 trillion in July 2024, rising by 56.18 percent from N2.595 trillion recorded in the corresponding period of July 2023.

When an economy is growing, businesses and consumers need more cash for transactions, leading to a rise in currency circulation. Also, increased government spending, especially in cash-intensive projects, can inject more money into the economy. On a monthly basis, currency in circulation increased by 0.12 percent from N4.048 trillion in June 2024.

Money outside banks drops by 65.61%

Currency outside banks (COBs) declined to N3.66 trillion month-on-month, representing 3.43 percent drop compared to N3.79 trillion in June 2023. On a yearly basis, COBs rose by 65.61 percent from N2.21 trillion recorded in the corresponding period of 2023.

Credit to government declined 31,19%

Net credit to the government plummeted by 31.19 percent to N19.006 trillion in July 2024 compared to N27.621 trillion in June 2023. On a monthly basis, it went down from N23.932 trillion in July 2024.

Loans to private sector rise to N75.48trn

According to the data, credit to the private sector continued to grow, rising to N75.48 trillion year-on-year in July 2024. This represents 33.69 percent from N56.46 trillion in the corresponding period of June 2023. On a monthly basis, banks credit to the private sector increased by 3.13 percent from N73.19 trillion in June 2024.

The increase in credit to the private sector has been attributed to high demand for facilities to meet the rising cost of goods and services.

Muda Yusuf, CEO of the Promotion of Private Enterprise, noted that the cost of goods has increased significantly, saying despite rising prices, companies still need to purchase essential items for their operations.