Money supply hits N38 trillion in Q1 2021.
ALEDEH News reports the rise in demand for cash by members of the public to meet the increasing prices of goods and services, following the upward trend of inflation, caused the money supply in the economy to increase by 22.5 percent Year-on-Year (YoY) to N38 trillion in the first quarter of the year (Q1’21).
Nigeria’s inflation rate rose from 17.33 percent (year-on-year) recorded in February to 18.17 percent (year-on-year) in March 2021, according to data provided by the National Bureau of Statistics (NBS). Food inflation also rose to 22.95 percent in March 2021 following the increase in the pump price of petroleum products, electricity tariff, naira depreciation and the farmer-herders crisis.
Latest data released by the Central Bank of Nigeria (CBN) on Credit and Money supply for Q1’21 showed that the Broad Money supply (M2) rose by 22.5 percent, YoY, to N38.03 trillion in Q1’21 from N31.01 trillion in Q1’2020.
Further analysis showed that the increase in Broad Money supply (M2) was driven by 46 percent YoY increase in Narrow Money supply (M1), which comprises Currency Outside Banks (COB) and Demand Deposits (Current Account deposits of bank customers).
According to the CBN, the Narrow Money supply rose by N5.08 trillion to N16.17 trillion in Q1’21 from N11.12 trillion in Q1’2020.
Further breakdown showed that the increase in Narrow Money supply (M1) is largely caused by 50 percent (YoY) upsurge in Demand Deposits, which rose by N4.67 trillion to N13.87 trillion in Q1’21 from N9.22 trillion in Q1’ 2020.
Currency Outside Banks (COB) also grew by N430 billion or 23 percent, YoY, to N2.33 trillion in Q1’21 from N1.89 trillion in Q1’2020. Also contributing to the increase in Broad Money supply (M2) is a 9.5 per cent, YoY, rise in Quasi Money, which comprises Savings deposits, Fixed Deposits and Foregn currency deposits of bank customers.
The CBN noted that Quasi money rose by N1.94 trillion to N21.84 billion in Q1’21 from N19.90 trillion in Q12020.