Money supply in the nation, measured by M1B and M2, last month grew 8.08 percent and 7.65 percent respectively, the slowest annual rates in more than a year, as stock corrections continued to sideline investors, the central bank said on Monday.
Annual growth of M1B, a widely used gauge of cash and cash equivalents, was the slowest in 25 months, while M2, which additionally takes into account time deposits, time savings deposits, foreign currency deposits and mutual funds, grew the slowest in 18 months.
Retail investors accounted for 56.3 percent of daily stock turnover last month, down from 74.7 percent in July last year, causing securities accounts to fall to NT$2.97 trillion (US$99.21 billion), the lowest in 13 months, the central bank said.
The figure suggested a decline of NT$39.3 billion from one month earlier, it said.
The TAIEX last month dropped 11.79 percent from 16,808 to 14,826 points, as foreign portfolio managers cut holdings in local shares, in line with global capital redeployment to deal with monetary tightening, the central bank said.
M2 was affected by faster capital outflows, the central bank said.
The US Federal Reserve last month raised policy rates 0.75 percentage points, faster than its earlier guidance of 0.5 percentage points, to help fight inflation.
Pundits have forecast a steeper rate hike of 1 percentage point later this week, after US consumer prices proved more formidable.
In Taipei, the central bank said Taiwan does not have to follow suit, but would tackle inflation in line with domestic needs.
Taiwan’s consumer price increases are relatively moderate, at about 3 percent, rendering drastic monetary responses unnecessary, officials said.
Interest rate hikes at home and abroad have dampened the appeal of demand deposits, of which the growth rate mitigated from 7.65 to 6.43 percent, officials said.
However, cash needs for corporate income taxes and cash dividend payouts also weighed on overall M2 movement, officials said.
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