Annual growth of the nation’s M1B and M2 money supply last month increased for the third consecutive month on the back of capital inflows by foreign portfolio investors and a lower comparison base in July last year, the central bank said yesterday.
M1B, a narrow measure of the money in circulation, including currency and passbook savings deposits, rose 8.63 percent from a year ago, compared with a 7.89 percent year-on-year increase in June, the bank said in its monthly report.
The annual increase was the highest seen since March 2011, with M1B’s average daily volume last month reaching its highest level ever at NT$12.8 trillion (US$426.45 billion), bank data showed.
The broader M2 measurement — which includes M1B, time deposits, foreign currency deposits and mutual funds — increased 5.42 percent last month compared with the same period last year, higher than the 4.82 percent increase posted in June and marking the highest level since October 2011, the report said.
“The rising annual growth in M1B and M2 was primarily due to net foreign capital inflows,” Chen E-dawn (陳一端), deputy head of the bank’s economic research department, told a media briefing.
Foreign portfolio investors poured in US$2.77 billion last month, compared with net outflows of US$2.8 billion in the same month last year, signifying a low comparison base.
Meanwhile, listed companies distributed a total of NT$189.5 billion in cash dividends last month, an indication that some of these firms may have repatriated overseas capital to pay dividends, further boosting M1B and M2 growth, Chen added.
Chen said the money in circulation remains abundant, with national economic sentiment in the second half of the year expected to be better than in the first half.
For the first seven months, the average annual growth rate of M1B and M2 were 6.41 percent and 4.08 percent respectively, central bank data showed.