The annual growth of M1B and M2 money supplies last month reached their highest level in more than two years, marking the 14th consecutive “golden cross” month, an indication of sufficient liquidity.
A “golden cross” emerges when the annual growth of the M1B money supply surpasses that of the M2 money supply.
The M1B, a narrow measure of money in circulation, including currency and passbook savings deposits, rose 8.85 percent from a year ago, up from an 8.58 percent year-on-year increase in October and reached its highest level since March 2011, the central bank said yesterday.
The broader M2 measurement — which includes M1B, time deposits, foreign currency deposits and mutual funds — increased 6.05 percent last month compared with the same period last year, higher than the 5.99 percent increase a month earlier, marking its highest level since August 2011, the central bank said in its monthly report.
“The stronger net inflows from foreign portfolio investors have helped raise the growing level of M1B and M2 this year,” Chen E-dawn (陳一端), deputy head of the bank’s economic research department, told a media briefing.
Net inflow of foreign portfolio investors stood at the relatively strong level of US$11.3 billion in the first 11 months of the year, up from about US$4.5 billion recorded in the same period last year, Chen said.
However, last month’s M2 monetary gauge’s 6.05 percent year-on-year increase has been closer to the peak level of its target growth zone for this year, which was set between 2.5 percent and 6.5 percent, further boosting concern over excessive liquidity in Taiwan.
Chen said the central bank would adjust its target growth zone of M2 for next year at its board meeting today, adding that the economy’s growth and headline inflation are important markers for setting the zone.
In the first 11 months of the year, the average annual growth rates of M1B and M2 were 7.16 percent and 4.69 percent respectively, central bank data showed.