The nation’s money supply last month climbed at the fastest rate in more than a decade, reflecting growing interest in the local board and ample liquidity in the banking system, the central bank said yesterday.
The narrow M1B money supply gauge, referring to cash and cash equivalents, surged 16.17 percent year-on-year, as the securities account balance rose to a high of NT$2.65 trillion (US$93.34 billion), the central bank said.
M1B readings are often used to judge the popularity of local shares, as high M1B growth rates suggest that investors are ready to join the market, while M1B slowdowns indicate people would rather hold money in time deposits.
Photo: Tyrone Siu, Reuters
The latest M1B increase is the fastest since May 2010, with retail investors weighing 67.4 percent of the local board, the highest since January 2011, attracted by a record TAIEX, central bank data showed.
The TAIEX rallies were not broad-based, but mainly concentrated in electronics stocks, the central bank said, adding that daily turnover averaged NT$258.5 billion, also a record.
The broad money measure of M2 — which includes M1B, time deposits, time savings deposits, foreign currency deposits and mutual funds — advanced 8.45 percent from a year earlier, the fastest pickup since August 2009, the central bank said.
Capital inflows and loan growth in the financial system accounted for the increase in M2, the monetary policymaker said.
Excessive liquidity helped push up the local currency, which closed virtually unchanged at NT$28.391 against the US dollar in Taipei trading yesterday, compared with NT$29.381 on Friday.
The New Taiwan dollar has consistently traded higher in intraday sessions until the final 15 minutes, when interventions from the central bank slow the pace of appreciation.
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