Money supply growth rate plummets amid trade woes

  • By Crystal Hsu / Staff Reporter

Money supply in the country, measured by M1B and M2, rose last month by 8.08% and 7.65% respectively, the lowest annual rates in more than a year, as stock market corrections continued to ward off investors, the central bank announced on Monday.

Annual growth in M1B, a widely used indicator of cash and cash equivalents, was the slowest in 25 months, while M2, which also takes into account time deposits, term savings deposits, foreign currency deposits and mutual funds saw the slowest growth in 18 months .

Retail investors accounted for 56.3% of daily equities turnover last month, down from 74.7% in July last year, leading securities accounts to fall to NT$2.97 trillion ($99.21 billion), the lowest in 13 months, the central bank said.

The figure suggests a drop of NT$39.3 billion from the previous month, he said.

Last month, the TAIEX fell 11.79 percent from 16,808 to 14,826 points as foreign money managers reduced their holdings of local equities in line with global capital redeployment to cope with monetary tightening, the Bank said. central bank.

M2 was hurt by faster capital outflows, the central bank said.

Last month, the US Federal Reserve raised its key rates by 0.75 percentage points, faster than its previous forecast of 0.5 percentage points, to help fight inflation.

Experts forecast a steeper rate hike of 1 percentage point later this week, after US consumer prices came in more daunting.

In Taipei, the central bank said Taiwan did not have to follow suit but would tackle inflation based on domestic needs.

Consumer price increases in Taiwan are relatively subdued, at around 3%, making drastic monetary responses unnecessary, officials said.

Interest rate hikes at home and abroad dampened the appeal of demand deposits, whose growth rate fell from 7.65 to 6.43 percent, officials said.

However, cash needs for corporate tax and cash dividend payments also weighed on overall M2 developments, officials said.

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