The nation’s money supply slowed last month as firms and individuals shifted funds to time deposits and other investment tools overseas in pursuit of higher yields, the central bank said on Monday.
The M1B money supply gauge — cash, demand deposits and other liquid deposits — grew 2.01 percent year-on-year, but shed 0.05 percent from February, as firms cut demand deposits and raised holdings in time deposits and other investment vehicles, the central bank said.
“The M1B movements had much to do with the central bank’s monetary policy decisions,” the bank said.
Firms have converted some cash positions into time deposits to take advantage of interest rate hikes, it said.
The central bank dismissed the idea that the M1B data reflected TAIEX trends, saying that the local bourse often takes its cue from Wall Street, especially global technology and semiconductor plays that are major clients of local electronics suppliers.
The stock market is not lacking liquidity, as investors can channel money from time deposits into securities accounts instantly, the central bank said, adding that funds in securities accounts increased NT$11.5 billion (US$374.1 million) to NT$3.14 trillion, the third consecutive monthly increase.
The broader M2 measure, which encompasses time deposits, time saving deposits, foreign currency deposits, mutual funds and M1B, grew 6.58 percent year-on-year, but also lost momentum over the past few months, the central bank said.
The trend is consistent with poor exports, which weighed on the contributions of trade settlements, it said.
Local life insurance companies and pension fund managers facilitated the trend by increasing their holdings in foreign bonds and securities, the central bank said, adding that a rapid increase in overseas travel by Taiwanese had helped decelerate M2 data.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) quarterly sales topped estimates, reinforcing investor hopes that the torrid pace of artificial intelligence (AI) hardware spending would extend into this year. The go-to chipmaker for Nvidia Corp and Apple Inc reported a 39 percent rise in December-quarter revenue to NT$868.5 billion (US$26.35 billion), based on calculations from monthly disclosures. That compared with an average estimate of NT$854.7 billion. The strong showing from Taiwan’s largest company bolsters expectations that big tech companies from Alphabet Inc to Microsoft Corp would continue to build and upgrade datacenters at a rapid clip to propel AI development. Growth accelerated for
RSS