In the just concluded week, the Central Bank of Nigeria (CBN) depository corporations survey showed a 0.19% month-on-month (m-o-m) rise in Broad Money Supply (M3 money) to N35.70 trillion in April 2020.
This resulted from a 1.87% increase in Net Domestic Assets (NDA) to N29.78 trillion but partly offset by a 7.52% decrease in Net Foreign Assets (NFA) to N5.92 trillion.
On domestic asset creation, the increase in NDA was chiefly driven by a 2.96% m-o-m increase in Net Domestic Credit (NDC) to N39.10 trillion.
Further breakdown of the NDC showed a 7.15% m-o-m increase in Credit to the Government to N10.43 trillion and a 1.51% rise in Credit to the Private sector to N28.67 trillion.
On the liabilities side, the 0.19% m-o-m increase in M3 Money was driven by the 2.97% m-o-m increase in M2 Money to N31.76 trillion but was partly neutralized by a 17.74% fall in treasury bills held by money holding sector to N3.94 trillion.
The increase in M2 was propelled by a 1.98% rise in Quasi Money (near maturing short term financial instruments) to N20.18 trillion and a 4.74% increase in Narrow Money (M1) to N11.59 trillion (of which Demand Deposits increased by 5.57% to N9.68 trillion, and currency outside banks, rose by 0.70% to N1.90 trillion).
Reserve Money (Base Money) rose sharply m-o-m by 20.70% to N12.25 trillion as Bank reserves rose significantly m-o-m by 26.61% to N9.94 trillion, accompanied by a 0.49% rise in currency in circulation to N2.31 trillion.
We expect credit to private sector and government to rise further in the coming months amid CBN palliative measures and the planned huge borrowing by FG. These, in addition to the current planting season and the planned increase in electricity tariff in July, would put pressure on food and non-food prices going forward.
Cowry Asset Research
