M3 Grew 6.50% y-o-y to L.P 175,926B by December 18

During the two weeks ending December 18, 2014, broad Money M3 increased by LP 332B ($220.29M), to reach LP 175,926B ($116.70B). M3 growth rate reached 6.50% year-on-year and 4.99% since year start. In contrast, M1 lost LP 246B ($163.37M) due to the decrease in money in circulation by LP 248B ($164.51M) and an uptick in demand deposits by LP 2B ($1.33M), respectively.

Total deposits (excluding demand deposits) increased by LP 578.36B ($383.66M), given the rise in deposits denominated in foreign currencies and term and saving deposits in domestic currency by $183M and LP 302B, respectively. Over the above mentioned period, the broad money dollarization rate edged up from 58.70%recorded in the past 2 weeks to 58.74% by December 18, 2014. According to the Central Bank, the overnight interbank rate stood at 2.75% at the end of October 2014.

In the TBs auction held on the 25th of December 2014, the Ministry of Finance raised LP 531.97B ($352.88M), through the issuance of bills maturing in 1Y, and 2Y and 3Y notes. The highest demand was achieved on the 3Y notes that took a share of 86.39%, while the 1Y bills and the 2Y notes accounted for 9.47% and 4.14%, respectively. The 1Y bills yielded 5.08%, while the average coupon rate for 2Y and 3Y notes stood at 5.84% and 6.50%, respectively. New subscriptions exceeded maturing T-bills by LP 190.39B ($126.30M).

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