The nation’s M2 broad monetary gauge last month grew faster than the narrow M1B measure, as people cut cash positions and increased time deposits amid interest rate hikes and TAIEX corrections, the central bank said yesterday.
M1B, which refers to cash and cash equivalents, increased 5.18 percent from a year earlier, slower than the 7.32 percent gain in M2, which encompasses M1B, time deposits, time savings deposits, foreign currency deposits and mutual funds, the central bank said.
The movements came after time deposits picked up 6.15 percent year-on-year to a record high of NT$15.53 trillion (US$500.53 billion), it said.
Interest rate hikes gave people incentives to hold on to cash, a trend that became apparent in the past few months, central bank officials told an online news conference.
The stock rout facilitated the fund adjustments, with securities accounts slumping NT$117.4 billion to NT$2.97 trillion, the steepest retreat since March 2010, when the eurozone was facing massive debt problems, the central bank said.
“People might have different feelings about the market this month, in light of a significant rebound in the TAIEX,” officials said.
Foreign currency deposits soared 23.52 percent to US$8.78 trillion, supported by trade settlements and reduced holdings in foreign securities by local investors, the central bank said, adding that the spike also had to do with attractive interest rates on foreign currency deposits.
Domestic banks have built up US dollar-denominated savings deposits in the hope of taking advantage of interest rate hikes by the US Federal Reserve.
The government and state-run enterprises helped boost M2 growth through bond issuance and borrowing, the central bank said, adding that CPC Corp, Taiwan (台灣中油) and Taiwan Power Co (台電) obtained huge loans to finance energy transformation efforts.
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