M1 up even as M2 and M3 fall during November
At the same time, both the money supply aggregates, M2 and M3 declined during this period.
Gross banks’ assets, including bankers’ acceptances, fell by 1.2 per cent, decreasing from AED3.24 trillion at the end of October 2020 to AED3.20 trillion at the end of November 2020.
Gross credit also decreased by 0.6 per cent from AED1.81 trillion at the end of October 2020 to AED 1.80 trillion at the end of November 2020.
M2, M3 decline
While M2 decreased by 2.4, per cent from AED1.49 trillion at the end of October 2020 to AED1.45 trillion billion at the end of November 2020, M3 decreased by 2.2 per cent, from AED1.81 trillion to AED1.77 trillion, during the said period.
A Central Bank of UAE statement explained that the increase in M1 was due to AED10.7 billion rise in Monetary Deposits, overriding the AED 0.8 billion drop in ‘Currency in Circulation Outside Banks’.
It also said that M2 decreased due to an AED46.3 billion reduction in Quasi-Monetary Deposits, overshadowing the rise in M1. “M3 mainly fell due to a reduced M2 and AED2.9 billion or 0.9 per cent reduction in Government Deposits,” the Central Bank statement said.
Apart from the assets and credit, total bank deposits also decreased by 1.8 per cent, falling from AED1.91 trillion at the end of October 2020 to AED1.88 trillion at the end of November 2020, attributable to 2 per cent reduction in Resident Deposits and 0.3 per cent decrease in Non-Resident Deposits.
M1, M2, M3 explained
M1is sum of currency in circulation outside banks and monetary deposits (current accounts and call accounts at banks, whereas, M2 is M1 plus quasi-monetary deposits (resident time and saving deposits in dirhams and resident deposits in foreign currencies.
M3 is the sum of M2 and Government Deposits at banks operating in the country.