UAE money supply on solid ground

The Central Bank of the UAE announced on Tuesday that the money supply aggregate M1 decreased by 0.2 per cent, from Dh799.3 billion at the end of October 2023 to Dh797.4 billion at the end of November 2023.

This was due to Dh4.9 billion fall in monetary deposits. Currency in circulation outside banks increased by Dh3.0 billion during November 2023.

The money supply aggregate M2 rose by 0.7 per cent, from Dh1.9223 trillion at the end of October 2023 to Dh1.9354 trillion at the end of November 2023. M2 rose due to Dh15.0 billion rise in quasi-monetary deposits, overriding the diminished M1.

The money supply aggregate M3 also increased by 0.5 per cent, from Dh2.3767 trillion at the end of October 2023 to Dh2.3886 trillion at the end of November 2023. M3 Increased because of an augmented M2, overshadowing the Dh1.2 billion reduction in government deposits.

The monetary base expanded by 2.9 per cent, from Dh596.9 billion at the end of October 2023 to Dh614.0 billion at the end of November 2023. The main driver was the rise in currency issued by 3.5 per cent in banks and OFCs’ current accounts & overnight deposits of banks at CBUAE by 19.1 per cent and in monetary bills and Islamic certificates of deposit by 1.1 per cent.

Gross banks’ assets, including bankers’ acceptances, rose by 0.8 per cent, from Dh3.9957 trillion at the end of October 2023 to Dh4.026 trillion at the end of November 2023.

Gross credit increased by one per cent from Dh1.9742 trillion at the end of October 2023 to Dh1.9945 trillion at the end of November 2023. Gross credit rose due to rises in domestic credit by 0.8 per cent and in foreign credit by 2.8 per cent.

Domestic credit grew because of 5.0 per cent, 2.0 per cent and 6.0 per cent increases in credit to the public sector (government related entities), private sector and to non-banking financial institutions, respectively.

Total bank deposits fell by 0.5 per cent, reducing from Dh2.4554 trillion at the end of October 2023 to Dh2.4443 trillion at the end of November 2023. The decline in total bank deposits was due to a decrease in non-resident deposits by 9.3 per cent, superseding an increase of 0.4 per cent in resident deposits.

Resident deposits rose owing to increase in private sector deposits by 1.9 per cent. Government sector deposits and public sector (government related entities) deposits fell by 0.5 per cent and 7.9 per cent, respectively and non-banking financial institutions deposits remained constant.

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