Sat, Feb 25, 2012 - Page 12 News List

M1B up on New Year, fund inflows, central bank says

SEASONAL TREND:An official said it was too early to say whether M1B would continue to rise this month given a high comparison base last year

By Amy Su  /  Staff Reporter

Funds in circulation increased last month, as measured by growth in both the narrow M1B and broader M2 money supply measures, amid a stronger demand because of the Lunar New Year holiday and net foreign capital inflows, the central bank said yesterday.

M1B, a narrow measure of the money in circulation that includes currency and passbook savings deposits, rose 3.86 percent from a year ago, up from a 3.51 percent year-on-year increase in December, and terminated a month-by-month contraction in the rate of growth that had lasted for the past five consecutive months, the bank said.

M2 MONEY SUPPLY

The broader M2 monetary measurement — which includes M1B, time deposits, foreign currency deposits and mutual funds — increased 5.22 percent year-on-year last month, up from a 5.01 percent growth rate in December, data showed.

“The Lunar New Year holiday usually drives up public demand for money, further fueling the annual growth in M1B money supply,” Chen E-dawn (陳一端), deputy head of the bank’s economic research department, told a press conference.

The US$3.02 billion net inflow of foreign capital was the other major factor driving last month’s growth in M1B, Chen said.

FOREIGN INVESTORS

However, foreign investors only bought a net total of NT$51.3 billion (US$1.73 billion) in Taiwanese shares last month, as foreign-held New Taiwan dollar deposits increased NT$36.8 billion from a month earlier, to NT$269.9 billion, she said.

“It is too early to say if the slowing trend for the M1B’s annual growth rate has changed into a rising trend,” Chen said, adding that the rebound in the M1B growth rate last month might only be a seasonal phenomenon.

Meanwhile, as last year’s Lunar New Year holiday fell in February, growth in M1B money supply this month will be measured against this high base, Chen added.

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