Money Supply Up 12.4% YtD to N139.38tn Despite CBN Tightening Stance

Kayode Tokede 

Nigeria’s broad money supply (M3) jumped 12.4 per cent Year till Date (YtD) to an all-time high of N139.38 trillion in August 2026, defying the Central Bank of Nigeria (CBN)’s ongoing monetary tightening efforts aimed at reining in inflation and stabilising the Naira at the foreign exchange market. 

M3, which serves as the most comprehensive measure of money in circulation within an economy, includes not only the cash used in everyday transactions but also large-scale deposits and financial assets that influence lending, investment, and inflation.

Despite the CBN’s firm stance on monetary tightening, the latest data from the apex bank indicates a year-on-year (YoY) increase of 16.5  per cent, with the money supply rising sharply from N119.69 trillion in August 2025.

The expansion comes as the CBN maintains a relatively tight monetary policy stance, with the Monetary Policy Rate (MPR) held at 26.50 per cent at its July 2026 Monetary Policy Committee meeting. The apex bank at its recent meeting cut the MPR to 23 per cent in a move to further tackle inflation. 

On a month-on-month basis, the figure climbed by 0.43 per cent from N138.78 trillion recorded in July  2026 from N139.38 trillion reported by CBN in August 2026.  

According to the CBN’s money & credit statistics, the M3 increased from N123.95 trillion in January 2026 to N124.99 trillion in April 2026, N129.21 trillion in May 2026 and N133.25 trillion in June 2026, before reaching N138.78 trillion in July 2026 and N139.38 trillion in August 2026.

The August increase amounted to approximately N601.6 billion compared with the previous month. 

In a bid to counteract inflationary pressures and stabilise exchange rate fluctuations, the CBN withdrew N4.72 trillion from the financial system through Open Market Operations (OMO) auctions between August 26 & 27, 2026.

Analysts noted that the move was part of broader efforts to reduce liquidity and cool rising consumer prices.

A closer look at the components of M3 reveals a notable shift in liquidity sources. 

In August 2026, the surge in money supply was driven largely by higher net foreign assets, which stood at N37.39 trillion, a 10.1  per cent YoY drop  from N41.59 trillion in August 2025.  

At the same time, net domestic assets increased significantly to N101.99 trillion in August 2026, up from N78.11 trillion in August 2025, a rise of 31 per cent YoY. 

This increase partially offset the fall in external assets and prevented a steeper decline in total money supply.

This interplay between domestic and foreign asset movements illustrates the delicate balancing act the CBN is managing: injecting or mopping up liquidity while maintaining FX stability and curbing inflation.

Nigeria’s money supply (M2), a narrower gauge of liquidity that excludes certain institutional holdings, also recorded appreciated  to N139.37 trillion in August , about 16.44 per cent increase when compared to N119.68 trillion in August 2025,

Narrow money (M1), which captures the most liquid assets such as currency in circulation and demand deposits, also increased. It moved from N39.39 trillion in August 2025 to N43.26 trillion in August 2026, a growth of 9.8er cent.

The increase in M1 points to increased cash availability, possibly driven by hike in  government spending, higher interest rates, or seasonal shifts in liquidity demand.

This shows that despite recent contractions, liquidity in the economy remains high by historical standards.

Commenting, Vice President, Highcap Securities, Mr. David Adnori explained that the unification of the local currency aided the increase in money supply in Nigeria.

According to him, “One thing is clear that if there is a deprecation in the value of a currency and part of the supply is foreign currency, by the time we monetize foreign currency to local currency, the figure is expected to increase. As we all know, a sizable portion of government revenue comes from oil exports and that is a big component that goes into the federation account.The increased government spending also contributed to M3 so  far in 2026.”

The M3, under Mr. Yemi Cardoso administration, recorded a steady decline from N109.4 trillion in September 2023 to N107.99 trillion in October 2023, to eventually close 2023 at  N113.36 trillion.

Nigeria’s money supply has been on the rise since the central bank began its expansive monetary policy stand in the wake of the Covid-19 pandemic and rising inflation rate.

Since September 2020, Nigeria’s money supply has doubled from N29 trillion before the lockdown (February 28th). However, the rise has been rapid in the last 12-18 months rising by about 34.6 per cent year-on-year.

The increase in money supply was also a result of the devaluation of the naira following foreign exchange unification in June 2023,