Fri, Aug 26, 2011 - Page 11 News List

Indicator shows capital momentum may be slowing

By Amy Su  /  Staff Reporter

The annual growth of M1B money supply fell last month amid the transfer of demand deposits to time and savings deposits, an indication that capital momentum in the nation may slow on investors’ lower confidence, the central bank said yesterday.

M1B, a narrow measure of money supply in circulation, rose 7.6 percent from a year ago, down from an 8.06 percent year-on-year increase in June, the central bank said.

“Last month’s slowing growth of the M1B provided more evidence that investors’ confidence was lowered by the rising uncertainties in the global economy,” Chen E-dawn (陳一端), deputy head of the economic research department told a media briefing.

Foreign investors sold a net total of NT$60.8 billion (US$2.09 billion) last month, with the outflow of net foreign capital standing at US$2.03 billion, the bank’s data showed.

However, foreign-held New Taiwan dollar deposits also surged NT$16 billion to NT$260.2 billion last month from a month earlier, indicating that foreign capital remains a driver for healthy market liquidity, Chen said.

The broader M2 monetary measurement — which includes M1B, time deposits, savings deposits, foreign currency deposits and mutual funds — increased 6.18 percent year-on-year last month, rebounding from 5.99 percent growth in June, on an increase in local banks’ net foreign assets, data showed.

Foreign currency deposits hit a record high of NT$2.59 trillion last month, up NT$41.7 billion from June, amid strong demand from firms paying dividends, Chen said.

On a monthly basis, the monetary aggregates M1B and M2 rose 0.5 percent and 0.61 percent last month, respectively, according to the bank’s data.

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