The nation’s money supply, as measured by M1B and M2, last month advanced 9.81 percent and 8.12 percent respectively, as securities accounts declined and time deposits picked up, the central bank said on Tuesday.
The growth rate of the narrower M1B measure, which refers to cash and cash equivalents, slowed further as corrections on the TAIEX drove investors to the sidelines, the central bank said.
Their conservative sentiment accounted for a decline of NT$94.5 billion (US$3.2 billion) in securities account balances, the steepest fall in 12 years, it said.
Photo: Tsai Ching-hua, Taipei Times
The broader M2 measure — which includes M1B, time deposits, time savings deposits, foreign currency deposits and mutual funds — gained 8.12 percent year-on-year, thanks to fund flows to time deposits and foreign currency deposits, the bank said.
Time deposits and foreign currency deposits climbed to new highs of NT$15.2 trillion and NT$7.8 trillion respectively, aided by an interest rate hike of 25 basis points in March and expectations that the US dollar would perform well, it said.
Higher interest rates attracted local firms to park profits from sales and money intended for cash dividend payouts, the bank said, adding that their choice of foreign currency deposits reflected expectations of a robust US dollar.
Savings deposits held by foreign investors surged 13.5 percent to NT$259 billion, indicating that foreign stock players did not quit the local bourse altogether, but are waiting for an opportunity to rejoin, it said.
Taiwan’s foreign exchange reserves fell below the US$600 billion mark at the end of last month, with the central bank reporting a total of US$596.89 billion — a decline of US$8.6 billion from February — ending a three-month streak of increases. The central bank attributed the drop to a combination of factors such as outflows by foreign institutional investors, currency fluctuations and its own market interventions. “The large-scale outflows disrupted the balance of supply and demand in the foreign exchange market, prompting the central bank to intervene repeatedly by selling US dollars to stabilize the local currency,” Department of Foreign
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