Annual M1B money supply growth slowed for the 10th consecutive month last month, but the central bank played down concerns over the downtrend, saying that market liquidity remained abundant.
The M1B — a narrow measure of money supply indicating capital momentum in the stock market — rose 10.05 percent from a year ago, compared with September’s 12.15 percent, central bank data showed.
The bank attributed the moderate growth to a higher comparison base last year.
In contrast, the broader M2 money supply — which includes M1B, time deposits, time savings deposits, foreign currency deposits and mutual funds — rose 4.8 percent from a year ago last month, representing its fifth straight month of growth.
Chen E-dawn (陳一端), deputy chief of the bank’s economic research department, said that the M2 rose as a result of continuous net foreign capital inflow and growth in bank loans and investments.
While the gap between the annual growth of the two money supply indicators narrowed to 5.25 percentage points, Chen said: “The possibility of a ‘black cross’ forming before the end of this year is not very high because it will have to depend on capital movements in the market.”
The black cross, also known as the death cross, indicates sluggish stock market performance because of low liquidity as investors shift massive amounts of funds to time deposits and foreign currency deposits in search of higher returns.
Central bank figures showed that as the New Taiwan dollar appreciated, investors switched their funds to foreign currency deposits, which rose by NT$120.4 billion (US$3.9 billion) from a month earlier to a record-high of NT$2.5 trillion last month.
“The jump in foreign currency deposits last month was mainly due to the remittance of foreign funds and purchase of foreign currencies because of a strengthening NT dollar,” Chen told a media briefing.
Total outstanding loans and investments of major financial institutions last month rose 5.96 percent from a year earlier, compared with September’s 5.29 percent growth, due to an increase in bank claims on the private sector and the government, the central bank said.
In the first 10 months of this year, M1B and M2 expanded by an average annual rate of 16.26 percent and 4.48 percent respectively.
Separately, the central bank yesterday sold NT$25 billion in 91-day treasury bills at a yield of 0.425 percent. That compares with a yield of 0.358 percent at a similar auction on July 26.
Yesterday’s auction of securities that will mature on Feb. 25 next year attracted 4.28 times the amount of debt offered. That compares with 4.97 times the sales of 182-day bonds on Nov. 11, central bank data showed.
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