The pace of increase in M1B and M2 money supply lost some momentum in January, as investors turned cautious amid local COVID-19 infections and unease over monetary tightening by global policymakers, the central bank said on Thursday.
The narrower gauge of M1B, which refers to cash and cash equivalents, rose 11.29 percent from a year earlier.
The pace of increase slowed from December and previous months, as government agencies and private companies cut back on demand deposits ahead of the Lunar New Year holiday, the central bank said, adding that it is not unusual for that time of the year.
Photo: CNA
The latest data still suggested ample liquidity to support economic activity and capital markets, the central bank said, as stock analysts often use M1B readings to calculate stock investment interest.
The broader measure of M2 — time deposits, time saving deposits, foreign currency deposits, mutual funds and M1B — advanced 7.87 percent in January, softer than the 8.72 percent pickup for the whole of last year, the central bank said.
Capital dynamism is not an issue with the local bourse, as securities accounts had a balance of NT$3.14 trillion (US$112 billion), even though the figure fell NT$32 billion from a month earlier, it said.
The retreat was due to foreign portfolio managers cutting positions ahead of the week-long Lunar New Year holiday and wiring abroad cash dividends distributed by Taiwan Semiconductor Manufacturing Co (台積電).
Financial markets around the world would remain volatile as Russia’s invasion of Ukraine unfolds, the central bank said.
Global capital would not sit idle, as the US Federal Reserve is expected to hike interest rates this month when its policy-setting Federal Open Market Committee meets on March 15 and 16, it said.
Taiwan’s central bank is to review its monetary policy on March 17.
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