M3 Fell by $433M to Stand at $134B by January 2nd 2020

BDL’s data on money supply revealed that Broad Money (M3) declined by LBP 653B ($433M) in the week ending January 02nd 2020 to settle at LBP 201,833B ($134B), thereby registering an annual decrease of 5.17% and a year-to-date (YTD) down tick of 0.32%.

In details, money supply M1, which includes currency in circulation and demand deposits in LBP, added LBP 198B ($131M) over the same week, reaching LBP 16,775B ($11B). The uptick in M1 is attributed to the increase of LBP 389B ($258M) in Currency in circulation, which outweighed the LBP 191B ($127M) decrease in Demand deposits.

In their turn, Total deposits (excluding demand deposits) fell by LBP851B ($565M). In fact, Term and saving deposits in LBP as well as Deposits denominated in foreign currencies dropped by LBP 544B ($361M) and $203M, respectively.

As such, the rate of broad money dollarization incrementally rose from 68.61% in the week ending December 26th 2019, to 68.68% in the week ending Jan. 02nd 2020.

In its treasury bills (T-Bills) auction dating December 19th 2019, the Ministry of Finance raised LBP 182.18B ($121M) through the issuance of bills maturing in 6 months  (6M) and notes maturing in 2 Years (2Y) and  10Y. The highest demand was realized on the long-term notes maturing in 10Y, as they composed 63.8% of the total subscriptions, while the 6M bills and 2Y notes accounted for the remaining shares of 3.2% and 33% of the total, respectively. In fact, the discount rate on the 6M bills stood at 5.85% while the coupon rates on the 2Y and 10Y notes stood at 7% and 10%, respectively.

Source: Banque du Liban, Lebanese Ministry of Finance

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