The nation’s M1B and M2 money supply measures last month slowed from the previous month, as firms and individuals adjusted their portfolios on the expectation that the global monetary tightening cycle is over, the central bank said on Monday.
The narrow money supply measure M1B — which refers to cash, demand deposits and other liquid deposits — posted an annual growth rate of 3.03 percent, down from a 3.32 percent increase in October, while the broader measure M2 — which includes time deposits, time-saving deposits, foreign currency deposits, mutual funds and M1B — slowed to 5.33 percent from 5.7 percent, it said.
Commenting on the slowing growth rates in the two measures, Department of Economic Research Deputy Director-General Tsai Hui-mei (蔡惠美) said that while foreign portfolio managers last month evidently raised their holdings in local shares, domestic corporate players were not as interested, judging by the pace of capital repatriation.
Photo: CNA
Rather, local financial institutions increased their stakes in US dollar-based debt and securities to lock in higher yields that are widely expected to go down once the US Federal Reserve embarks on interest rate cuts, Tsai said.
During the first 11 months of the year, M1B rose 2.79 percent and M2 advanced 6.34 percent from a year earlier, central bank data showed.
The M2 growth rate over the 11 months still fell within the central bank’s target range of 2.5 percent to 6.5 percent, as funding activity in the private sector remained vibrant and the liquidity level in the entire market is still abundant — beneficial to consumption, the stock market and other investment activities.
The securities account balance, a major confidence gauge of local shares on the part of retail investors, gained NT$139.2 billion (US$4.48 billion) to NT$3.29 trillion last month from NT$3.15 trillion the previous month, ending three consecutive months of declines, the central bank said.
The increase came as people channeled money to the local bourse to participate in liquidity-driven rallies, Tsai said.
The TAIEX picked up 8.98 percent, or 1,432.58 points, last month as investors generally considered the inventory downcycle was drawing to a close for technology products.
The latest data also showed that foreign institutional investors’ New Taiwan dollar-denominated deposits last month increased by NT$15.3 billion to NT$199.6 billion from October, the highest in the past three months.
Tsai attributed the growth to companies and individuals cashing in time deposits and US dollar deposits while shifting to the NT dollar and US dollar-linked bonds and securities that could offer better returns.
It also came as the NT dollar last month appreciated 3.7 percent against the greenback as the Fed’s dovish-leaning monetary policy stance caused a sell-off of the US currency, she said.
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