The annual growth of the M1B money supply expanded for the third consecutive month last month, as improving economic sentiment in the fourth quarter boosted transaction demand for money, the central bank said yesterday.
M1B, a narrow measure of the money supply in circulation, rose 3.65 percent last month from a year earlier, up from a 3.57 percent increase in October, the bank said.
“The rising trend [in annual growth of M1B] is mainly due to greater increases in passbook deposits resulting from foreign capital inflows,” Chen E-dawn (陳一端), deputy head of the bank’s economic research department, told a press conference.
The net inflow of foreign capital totaled US$1.26 billion last month, with foreign portfolio investors buying NT$42.8 billion (US$1.47 billion) in the nation’s stock market during the period, bank data showed.
The purchasers put foreign-held New Taiwan dollar deposits at NT$202.9 billion as of the end of last month, up only NT$2.1 billion from a month earlier, Chen said.
Taiwan has seen its economic sentiment gradually improve in Q4, as annual growth in M1B — a coincident indicator for the economy — increased in pace over the past three straight months, Chen said.
The broader M2 monetary measurement — which includes M1B, time deposits, savings deposits, foreign currency deposits and mutual funds — increased 3.26 percent year-on-year last month, down from 3.29 percent from October, data showed.
The re-allocation of funds towards non-deposit products such as insurance and mutual funds was the main factor behind the slowdown of M2, the bank said.
Chen said this also reflected the diversification of the nation’s financial products, which made people allocate assets more dynamically.
In the first 11 months of the year, the average annual growth rates of M1B and M2 were 3.32 percent and 4.22 percent respectively, statistics showed.
The results met the bank’s target growth zone of M2 money supply at 2.5 percent to 6.5 percent, indicating that capital momentum remained strong, Chen added.