The nation’s broad money supply measure, M2, expanded at a slower pace than its narrow gauge, M1B, last month as people trimmed time deposits in favor of financial products, the central bank said yesterday, citing the latest statistics.
The broader M2 monetary aggregate increased 3.29 percent last month from a year earlier, slowing from a 3.96 percent pickup in September, as mutual funds, insurance policies and other financial products became slightly more popular with the public, Chen E-dawn (陳一端), deputy head of the central bank’s economic research department, said at a press conference.
The M2 monetary supply figures captures the latest movements of time deposits, foreign currency deposits and mutual funds, as well as cash and cash equivalents, or M1B, the central bank’s monthly report showed.
The M1B reading grew 3.57 percent last month from its level a year ago, faster than September’s 3.35 percent gain, as the public’s risk appetite improved somewhat from the same period last year, when European debt problems worsened, Chen said.
Local stock analysts paid close attention to the narrow money supply figures, which they believe mirror the local bourse’s liquidity.
However, Chen refused to comment on whether the latest M1B and M2 readings lend support to a bullish stock market after forming “the golden cross” last month.
“All I can say is there is sufficient money supply in circulation for business activity,” Chen said.
The TAIEX closed up 1.11 percent yesterday with a healthy turnover of more than NT$80 billion (US$2.75 billion) after a 3.1 percent rebound on Friday, Taiwan Stock Exchange data showed.
The main index shed 2.3 percent last month, while securities savings accounts lost NT$84.1 billion, the central bank said, adding that trading volume fell to an average of NT$63 billion a day, compared with NT$85.3 billion a day in September.
“The local bourse has fared better this month judging from its recent showing, but it is hard to tell what will happen in the future,” Chen said.
In related news, the central bank yesterday sold NT$30 billion 273-day Treasury bills at a yield of 0.650 percent, lower than the 0.77 percent yield recorded in the sale of the same maturity debt in July and marking the lowest figure in two years.
The central bank, which was commissioned by the Ministry of Finance to auction the bills, said that the sale of 273-day Treasury bills maturing on Aug. 27 next year was 2.51 times oversubscribed.
The banking sector was the winning bidder for the bills, as buyers from the sector snapped up all the bills sold yesterday.
Additional reporting by Kevin Chen