The nation’s annual growth of M1B, a broad measure of money supply that includes currency held by the public and deposits, fell for the first time in one-and-a-half years, the central bank said yesterday.
The central bank attributed the subdued increase of 26.17 percent to a higher base effect because the Lunar New Year holidays fell in January last year, as well as to continuous net capital inflows.
“Liquidity was still affluent [last month],” Chen E-dawn (陳一端), deputy chief of the central bank’s economic research department, told a media briefing yesterday, adding that money supply usually increases during Lunar New Year.
The broader M2 monetary gauge, which includes M1B, time deposits, time savings deposits, foreign currency deposits and mutual funds, also saw reduced annual growth of 5.4 percent last month, the central bank’s data showed.
Chen declined to comment on whether liquidity in the investment market has been subdued. Instead, she said that the reduced increase in money supply was a result of seasonal influences.
According to central bank data, the monthly growth of demand deposits slowed last month as balances increased only NT$1.2 billion to NT$9.6 trillion, compared with growth of between NT$200 billion and NT$300 billion on a monthly basis in the past year.
Moreover, time and savings deposits posted a slight decrease of NT$4 billion from December to last month and totaled more than NT$11.8 trillion, in contrast with monthly growth of more than NT$100 billion in the past year.
As investors usually transfer their capital from time and savings accounts to demand deposit accounts before investing in the stock market, the reduced growth in demand deposits and the slight contraction in time and savings deposits indicates that capital inflows to the stock market slowed.
In terms of direct and indirect finance, the total outstanding loans and investments of major financial institutions increased 0.23 percent year-on-year last month, lower than the 0.73 percent growth in December, the central bank said.
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