x Abu Dhabi, UAEFriday 21 July 2017

Money supply rising in UAE Central Bank data

What's Up: The UAE Central Bank reported yesterday that by the most liquid measures, the country's money supply grew in the low single digits in October.

Money supply has a strong bearing on a country's inflation rate and exchange rates. Silvia Razgova / The National
Money supply has a strong bearing on a country's inflation rate and exchange rates. Silvia Razgova / The National

The UAE Central Bank reported yesterday that by the most liquid measures, the country's money supply grew in the low single digits in October.

Money supply has a strong bearing on a country's inflation rate and exchange rates.

Central banks often engineer the money supply to achieve policy objectives in these areas.

The Central Bank said that money supply M0 (currency in circulation plus currency at banks) increased 4.4 per cent from Dh54.8 billion at the end of September to Dh57.2bn at the end of October.

The Central Bank said a broader measure of the money supply, the money supply aggregate M1 (currency in circulation plus monetary deposits, such as current accounts and call accounts at banks), increased 1.4 per cent, from Dh289.8bn to Dh293.8bn in the same period.

Yesterday's report from the Central Bank contained a wealth of data about the many facets of money supply.

- Money supply aggregate M2, which consists of M1 and quasi-monetary deposits (resident time and savings deposits in dirhams, commercial prepayments in dirhams and resident deposits in foreign currencies), decreased 0.1 per cent, from Dh845.5bn at the end of September to Dh844.7bn at the end of October.

- The money supply aggregate M3 (M2 plus government deposits at bank operating in the UAE as well as at the Central Bank) increased 1.1 per cent, from Dh1.068 trillion at the end of September to Dh1.079tn at the end of October.

- Total bank deposits increased 1.6 per cent during October to close at Dh1.162tn.

- During the first 10 months of the year, M2 increased 2.3 per cent, while bank loans and advances rose 3 per cent and total bank deposits increased 8.7 per cent.

The UAE's annual consumer price inflation rate was 1.05 per cent at the end of September, up a tick from 0.95 per cent in August.

* WAM, with additional reporting by the National staff