M3 reached $127.25B Over the Period Ending August 25, 2022

M3 reached $127.25B Over the Period Ending August 25, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 2,017B ($1,338M) to stand at LBP 191,832B ($127.25B) by the week ending August 25, 2022. However, on an annual basis, M3 retreated by 4.50% year-over-year and by 4.17% since year-start (YTD).

In details, M1 fell by LBP 2,049B ($1,359M) by a week to settle at LBP 59,207B ($39.27B) by August 25, 2022; due to a decrease in demand deposits of LBP 1,655 billion and in currency in circulation of LBP 394 billion.

In turn, total deposits (excluding Demand deposits) increased by $21.03M, owing to an increase in Terms and saving deposits by $268 B (LBP 177.77M) while deposits denominated in foreign currencies declined by $157M.

As such, the rate of broad money dollarization increased from 59.088% by the week ending August 18, 2022 to 59.586 in the week ending August 25, 2022.

Looking at interest rates, the average rate on deposits in LBP at commercial banks decreased from 1.53% in September 2021 to 0.66% in September 2022. Similarly, the average rate on deposits in USD at commercial banks decreased from 0.26% in September 2021 to 0.09% in September 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.65% and 6.34% in September 2021 to 5.09% and 4.61%, respectively, in September 2022.

Analytically, the money supply M3 can be derived from combining the balance sheet of BDL with the balance sheet of banks to arrive at the monetary survey of the banking system. The resulting M3 would be equal to the sum of: net foreign assets (NFA), credit to the private sector (CPS), net credit to the public sector (NCPS), and other items net (OIN). Latest data show that in September 2022, M3 stood at $138.45B, 4.17% higher than September 2021; NFA were $10.98B, less by 26.63% YOY; CPS was $21.97B, less by 23.14% YOY; NCPS was $27.25B, less by 24.91% annually; and OIN were $78.24B, higher by an annual 47.52%, and comprising mostly (in BDL’s terminology) other assets which include open market operations and seigniorage, considered to be a controversial account by some.

In its treasury bills (T-Bills) auction dating August 25, 2022, the Ministry of Finance (MoF) raised LBP 1,068.14B ($708.55M) through the issuance of T-Bills maturing in 6 months (6M) and notes maturing in 2 years (2Y). A higher demand was recorded on the 2 years notes which grasped 93.62% of total subscriptions, while the 6 months T-Bills accounted for the remaining shares of 6.38%. In more details, the yield on 6 months stood at 4%, while the yield on the 2 years (2Y) reached 5%.

Source: BDL; MoF

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