The UAE Central Bank said the M1 money supply, which includes money in circulation outside banks plus monetary deposits, increased 0.3 percent to 644.4 billion dirhams ($ 175 billion) at the end of March 2021 against 642.3 billion dirhams at the end of April.
M2 money supply, which includes longer-term deposits, fell 1.7%, from MAD 1.48 trillion at the end of March 2021 to MAD 1.46 trillion at the end of April.
The overall money supply, M3, fell by 0.1%, from 1.76 trillion dirhams at the end of March to 1.76 trillion dirhams at the end of April.
The increase in M1, the most liquid part, is explained by the increase of 1.7 billion dirhams in currency in circulation and 0.4 billion dirhams in monetary deposits.
M2 decreases due to the decrease of 27.1 billion dirhams in quasi-monetary deposits, offsetting the increase in M1.
M3 fell due to the decline in M2, offsetting the 23.4 billion dirham increase in government deposits.
In March, the Central Bank said the liquidity of the banking system had returned to pre-COVID levels. Despite this, the monetary authority announced in April that its zero-cost financing program of 50 billion dirhams, launched a year ago as part of the targeted economic support program, would be extended until the end of June 2022.
The program was put in place to help banks maintain the flow of finance in the economy in order to mitigate the impact of the pandemic.
(Written by Brinda Darasha; edited by Seban Scaria)
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© ZAWYA 2021