UAE money supply at 14-month high

UAE Central Bank data shows that money supply (M3) in the country grew by 6.7 per cent year-on-year in January 2011, the fastest rate in 14 months, after a 3.9 per cent rise in the previous month.

The overall increase comes despite a month-on-month decline in M0 (currency in circulation + currency at banks), of 1.9 per cent, from Dh47.8b at the end of December 2010 to Dh46.9b at the end of January 2011. 

The increase, however, comes on the back of rising M1 and M2 during the month of January. M1 (currency in circulation plus monetary deposits, i.e., current accounts and call accounts at banks) increased by 1.7 per cent during the month, from Dh232.9b to Dh236.9b. 

As regards M2, which comprises M1 plus quasi-monetary deposits (the sum of resident time and savings deposits in Dirhams, commercial prepayments in Dirhams and resident deposits in foreign currencies), it increased by 1.1 per cent, from Dh786.4b as at the end of December 2010 to Dh795.2b at the end of January 2011. 

And M3 (M2 plus government deposits at the banking sector) increased by 1.2 per cent, from Dh985.2b at the end of December 2010 to Dh997.5b at the end of January 2011. 

Bank deposits increased by 0.7 per cent during the month of January 2011, reaching Dh1,057b. Meanwhile, total loans and advances (net of provisions and interest in suspense) increased by 1.2 per cent, reaching Dh1,043.4b, and total bank assets increased by 1.4 per cent, reaching Dh1.63 trillion at the end of January 2011.