Broad Money M3 Contracted by $354M by October 11th 2018

During the week ending October 11th, Broad Money (M3) shrank by a weekly LBP 533B ($354M) to stand at LBP 211,652B ($140B). As such, M3 rose by an annual 1.15% and by 1.71% since December 2017.

In fact, dissecting M3 reveals that M1 retreated by LBP 222B ($147M) during the week, to stand at LBP 11,149B ($7B). The decline in M1 was driven by downticks in both, demand deposits as well as currency in circulation by the respective amounts of LBP 116B ($77M) and LBP 106B ($70M), respectively.

Total deposits (excluding demand deposits) fell by LBP 311B ($206M) over the week, on the back of the respective declines of $47M and LBP 240B ($159M) in deposits denominated in foreign currencies and in Term and saving deposits over the week ending Oct. 11th.

As such, the rate of broad money dollarization grew from 62.83% to 62.96% this week. As for the overnight interbank rate, data from the central bank showed it steadied at 5% from July 2018 to August 2018.

In the Treasury Bills Auction held on September 20, 2018, the Ministry of Finance (MoF) raised LBP 103B ($68M), through the issuance of bills maturing in 3 months (3M) and 12 months (12M), and notes maturing in 5 years (5Y). The highest demand was achieved on the 12M bills, which accounted for 51.20% of total subscriptions, while the 3M bills and 5Y notes accounted for the remaining shares of 24.54% and 24.26%, respectively. The discount rate on the 3M bills and 6M bills stood at 4.39% and 5.08%, respectively, while the coupon rate on the notes maturing in 5Y at 6.74%.


Leave a Reply

Your email address will not be published. Required fields are marked *