Tue, Jul 26, 2016 - Page 12 News List

M1B and M2 rise year-on-year, fall month-on-month

By Crystal Hsu  /  Staff reporter

The nation’s money supply measures increased last month from a year earlier, but the pace slowed compared with May, as passbook deposits slowed ahead of dividend payouts, the central bank said yesterday.

The money supply gauges M1B and M2 last month advanced 6.23 percent and 4.42 percent respectively from their levels a year earlier, the central bank said, adding that represented a decline of 0.56 percent and 0.08 percent from their levels in May.

The latest data suggested there is sufficient money in the economy and available for spending. Money supply is a crucial tool for policymakers to support and maintain a nation’s steady economic growth.

The central bank attributed the monthly slowdown in the narrow M1B, which gauges cash and cash equivalents, to some demand deposits flowing into short-term time deposits to support later dividend payouts.

Inflows of foreign funds helped underpin the annual growth in the broader M2, which includes savings deposits, time savings deposits, foreign currency deposits and M1B.

The inflows helped to explain the New Taiwan dollar’s 0.22 percent devaluation last month, it said.

Last month saw US$4.05 billion in net foreign fund inflows, the second highest this year, according to the Financial Supervisory Commission. For the first half of this year, foreign fund inflows totaled US$9.51 billion.

The US Federal Reserve’s decision to keep its interest rates unchanged helped drive funds back to emerging markets, including Taiwan.

Equity accounts last month rose NT$13.8 billion (US$429.37 million) to NT$1.42 trillion, reflecting a rebound in foreign investors’ interest in local shares, the central bank said.

Global funds, which have cut positions in emerging market assets, would increase their holdings to better balance their portfolios, JPMorgan Asset Management Hong Kong-based chief strategist Tai Hui (許長泰) said in Taipei last week.

Some local shares are attractive, because they pay out relatively high dividends, Hui said.

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