Residents of Taiwan still have plenty of funds at their disposal, given the continued annual growth in money supply last month, Yuanta Securities Investment Consulting Co (元大投顧) said in a research note on Thursday.
Yuanta’s remark came a day after the central bank released data for last month showing that the M1B money supply — a narrower measurement of the money in circulation, including currency and passbook savings deposits — rose 18.57 percent year-on-year and 17.81 percent month-on-month.
Last month’s figure was the highest increase since March 2010 and it was the eighth consecutive month that M1B money supply showed double-digit percentage growth, central bank data showed.
Photo: Reuters
The broader M2 monetary aggregate — which includes M1B, time deposits, foreign-currency deposits and mutual funds — increased 9.12 percent year-on-year and 8.84 percent month-on-month.
Last month’s M2 figure was the highest increase since July 1999, the data showed.
In a statement on its Web site, the central bank attributed the M1B and M2 growth to greater demand for cash and an increase in currency issuance because of the Lunar New Year holiday.
Yuanta economist Yen Chen-hui (顏承暉) said in the research note that Taiwan’s booming stock market pushed the balance in securities accounts to a record NT$2.77 trillion (US$96.8 billion) at the end of last month, which not only accelerated M1B growth, but also indicated that stock investors have sufficient cash at hand.
The change in stock investors’ account balances reflects individual investor sentiment.
The TAIEX last month rose 645.68 points, or 4.15 percent, Taiwan Stock Exchange data showed.
As annual M1B growth is higher than M2 growth, there is abundant liquidity in the market, Yen said.
Given abundant market capital and a stable COVID-19 situation in Taiwan, where the economy is growing and consumer prices have edged upward, the central bank has limited room to cut its policy rates in the near term, which would support the exchange rate of New Taiwan dollar, he said.
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