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Taiwan's Growth of Money Supply Indicator M1B Rises to 39-Month High in January 2014

2014/03/04 | By Judy Li

The annual growth of Taiwan's two major money supply indicators—M2 and M1B—posted at 5.97% and 9.93%, respectively in January, with the growth of the latter hitting a 39-month high, according to the central bank.

An official at the central bank indicates that the growing money supply in January was due mainly to rising demand for capital for the Chinese New Year holiday. Besides, last year's lower comparison base also helped to boost the growth of money supply for the month.

Taiwan witnessed the “golden cross” of the two money supply indicators since October 2012 as the annual growth of M1B was higher than that of M2 and the gap of the two further widened to 3.96 percentage points in January of this year, suggesting oversupply of money in the market.

The statistics of the central bank also show that the outstanding NT-dollar deposits held by foreigners in Taiwan's banking system came to NT$172.7 billion (US$5.76 billion) at the end of January, for a monthly drop of NT$17.3 billion (US$576.67 million).

In the same month the outstanding value in securities trading accounts declined NT$7.1 billion (US$236.67 million) from a month earlier to NT$1.2929 trillion (US$43.1 billion); while the outstanding deposits in the postal savings system hit a new high of NT$5.2643 trillion (US$175.48 billion). Yet, the outstanding foreign-currency deposits in the banking system here dropped  NT$29.6 billion (US$986.67 million) from a month earlier to NT$3.4455 trillion (US$114.85 billion), ending the 15th consecutive monthly rise of such deposits.

To digest idle funds, the central bank has lately been instructed  by the treasury to auction off 10-year bonds worth NT$40 billion (US$1.33 billion) with per annum interest rate of 1.583%. (JL)