Annual growth in the nation’s M1B and M2 money supply last month increased for the second consecutive month, as domestic investors’ move to repatriate capital offset the impact from capital outflows by foreign portfolio investors, the central bank said yesterday.
M1B, a narrow measure of the money in circulation, including currency and passbook savings deposits, rose 7.89 percent from a year ago, compared with a 7.04 percent year-on-year increase in May, the bank said in its monthly report.
The increase was the highest since June 2011, according to the bank’s data.
The broader M2 measurement — which includes M1B, time deposits, foreign currency deposits and mutual funds — increased 4.82 percent year-on-year last month, higher than the annual increase of 4.32 percent in May, the report said.
“The rising year-on-year growth in M1B and M2 was mainly due to higher growth in bank loans and investments,” Chen E-dawn (陳一端), deputy head of the bank’s economic research department, told a media briefing.
Concerns over the end of US quantitative easing led foreign investors to withdraw US$2.96 billion from Taiwan last month, which has had a negative impact on the growth of M1B and M2 money supply, Chen said.
However, domestic investors were also worried about volatility of overseas markets and redeemed as much as NT$90 billion (US$3 billion) from overseas funds last month, offsetting the effect of foreign capital outflow, Chen said.
The central bank said some listed Taiwanese firms might repatriate some overseas capital following the distribution of cash dividends this month and next month.
Taiwanese listed companies are set to distribute a total of NT$189.5 billion in cash dividends this month, followed by NT$318.3 billion next month, bank data showed.
For the first six months of this year, the average annual growth rates of M1B and M2 were 6.05 percent and 3.86 percent respectively, statistics showed.