Sat, Aug 25, 2012 - Page 13 News List

Money supply growth continues to slow

DOWNTREND:Despite the slower pace of growth, capital remained abundant, with loans in the banking sector rising 5.17 percent in January to July, the central bank said

By Amy Su  /  Staff reporter

Despite a downward trend in annual money supply growth in the past three months, the central bank yesterday said that capital momentum remained healthy.

M1B — a narrow measurement of money supply in circulation, including currency and passbook savings deposits — rose 2.88 percent last month from the previous year, lower than the 3.18 percent growth posted in June, the bank said in a report.

It was the third consecutive month that M1B growth has slowed, with the 2.88 percent rise marking the lowest increase since February 2009, the bank’s data showed.

The broader M2 monetary aggregate — which includes M1B, time deposits, foreign currency deposits and mutual funds — increased 3.8 percent year-on-year last month, slower than the 4.19 percent growth posted the previous month. It was the lowest increase since June 2010, the bank said.

CAPITAL OUTFLOWS

“The slowing growth rates of both M1B and M2 last month were mainly due to net foreign capital outflows,” Chen E-dawn (陳一端), deputy head of the central bank’s economic research department, told a press conference.

Net foreign capital outflow totaled US$2.79 billion for last month, Chen said.

Foreign currency deposits dropped NT$81.8 billion (US$2.73 billion) from a month earlier to NT$2.64 trillion last month, as a number of listed firms converted their foreign-currency holdings into New Taiwan dollars for dividends distribution, the report said.

Chen said that capital momentum remained abundant, as the banking sector’s loans rose 5.17 percent from a year earlier in the first seven months of the year.

Foreign portfolio investors have bought a net NT$92.1 billion in shares since Aug. 1, Chen added.

Monetary aggregates

M1B money supply grew 2.88 percent year-on-year last month — the lowest increase since February 2009.

M2 money supply grew 3.8 percent year-on-year last month — the lowest increase since June 2010.

Source: Central Bank


SECURITIES

Meanwhile, the outstanding balance held in securities accounts slid NT$700 million month-on-month to NT$1.206 trillion last month — the fifth straight month it fell — but the level of contraction has been slowing.

For the first seven months of the year, the average annual growth rates of M1B and M2 were 3.32 percent and 4.61 percent respectively, data showed.

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