UAE’s money supply rises by 0.9% in Sept. ’24 – c. bank

The UAE’s money supply aggregate M1, which includes currency in circulation and monetary deposits, rose by 0.9% to AED 896.3 billion at the end of September, up from AED 888.0 billion in August, according to the Central Bank of the UAE (CBUAE).

The Central Bank of the UAE (CBUAE) stated that the money supply aggregate M1, which includes currency in circulation and monetary deposits, rose by 0.9 per cent, reaching AED 896.3 billion at the end of September, up from AED 888.0 billion in August.

The increase was driven by a AED 2.0 billion rise in currency circulation outside banks and AED 6.3 billion growth in monetary deposits.

M2 Supported by Quasi-Monetary Deposits

M2, which includes M1 plus quasi-monetary deposits, increased by 1.7 per cent to AED 2,249.6 billion, compared to AED 2,211.1 billion in August. The expansion was attributed to the higher M1 and a AED 30.0 billion increase in quasi-monetary deposits.

M3 Expands Despite Decline in Government Deposits

M3, the broadest measure of money supply, grew by 0.9 per cent, reaching AED 2,719.8 billion at the end of September from AED 2,696.3 billion in August. The increase was primarily supported by M2 growth, which outweighed a AED 15.0 billion decline in government deposits.

Monetary Base Shows Steady Gains

The monetary base expanded by 1.2 per cent to AED 743.5 billion in September, up from AED 734.9 billion in August. The increase was driven by a 1.0 per cent rise in currency issued and a significant 39.2 per cent increase in banks’ and the offshore financial centre (OFC) current accounts and overnight deposits at the Central Bank, which offset a 14.1 per cent reduction in reserve accounts. Monetary bills and Islamic certificates of deposit remained unchanged at AED 240.9 billion.

Banking Assets Continue to Grow

Gross banks’ assets, including bankers’ acceptances, grew by 0.5 per cent to AED 4,401.7 billion in September, up from AED 4,378.0 billion in August.

Robust Credit Growth

Gross credit recorded a notable increase of 2.3 per cent, reaching AED 2,161.9 billion from AED 2,112.9 billion the previous month. This was driven by a 1.6 per cent rise in domestic credit and a 6.9 per cent increase in foreign credit. Meanwhile, domestic credit growth was supported by increases in credit to the government sector (0.4 per cent), public sector entities (2.7 per cent), private sector (1.5 per cent), and non-banking financial institutions (1.8 per cent).

Deposits Show Positive Momentum

Banks’ deposits also saw a 0.8 per cent increase, rising to AED 2,761.4 billion in September from AED 2,740.5 billion in August. The growth was attributed to an 0.8 per cent rise in resident deposits and a 0.5 per cent increase in non-resident deposits.

Resident deposits grew as deposits from government-related entities surged by 4.9 per cent, private sector deposits rose by 0.8 per cent, and deposits from non-banking financial institutions jumped by 20.5 per cent, offsetting a 3.9 per cent decline in government sector deposits.

Attribution: Monetary & Banking Developments – September 2024

Subediting: M. S. Salama