Monetary aggregates rise in Jan. on CNY, inflows: bank

By Camaron Kao ,The China Post

The China Post–The annual growth rate for 2012 of M1B (currency and deposits held by the general public) and M2 (M1B and quasi-money with high liquidity) rose to 3.86 percent and 5.22 percent respectively in 2011, caused by the Chinese New Year holidays and net foreign capital inflows in January of approximately NT$90.63 billion, NT$51.3 billion of which went into the local bourse, according to the Central Bank of the Republic of China. The monthly growth rate of the monetary aggregates M1B and M2 in January, measured on a daily average basis, were 2.33 percent and 1.43 percent respectively, both higher than December 2011. The central bank also attributed this to the Chinese New Year holidays and net foreign capital inflows.

Quasi-money (or “near money”) increased by NT$33.25 billion last month. Among the quasi-money, postal deposits increased by NT$13 billion. “This may be because companies need to give out bonus before the Chinese New Year and decommissioned veterans received certain amounts of money in January, which are usually done via the post office,” stated the central bank.

Foreign currency deposits of enterprises rose by NT$10 billion, which also contributed to the increase of quasi-money in January. “This is because information technology companies give out their bonuses in U.S. dollars before the Chinese New Year,” the central bank said. As for direct and indirect investment, the central bank calculated that at the end of January, the monthly growth rate of total outstanding loans and investments of monetary financial institutions, measured on a cost basis, was 0.9 percent higher than that of the previous month. The annual growth rate declined from 6 percent at the end of the previous month to 5.2 percent. The decline was mainly caused by the slowing down of growth in bank claims on private sector and government enterprises.