UAE Monthly Monetary Survey April
Monetary Developments (*) M increased by %, from AED 490.3 billion at the end March to AED billion at the end April 2016. This increase was due to a % increase in Currency in Circulation outside (12.7% M ) and a % increase in Monetary Deposits (87.3% M ). At the end April, M decreased by 1.3%, falling from AED billion at the end March to AED billion. The reduction in M was attributed to a 2.5% decrease in Quasi- Monetary Deposits (59% M ). M increased marginally, rising from AED 1,373.8 billion at the end March to AED 1, billion at the end April. The increase in M was brought about by an increased M and a % increase in Government Deposits ( % M ), overshadowing the reduction in M. In summary, April 2016 witnessed M and M increase by % and 0.01%, respectively and M fall by 1.3%. The Money Multiplier The money multiplier indicates by how much the money supply and the underlying components will grow following an increase 1 billion in the Monetary Base, defined as the sum Currency issued (Currency in circulation outside banks and cash at banks), Total ' Reserves at the Central Bank and Certificates Deposits held by (see Table 2). During the month April, the Monetary Base contracted by % owing to a combined reduction in; Currency Issued (23.4% the Monetary Base) by % and reduction in Certificates Deposits purchased by ( % the Monetary Base) by 7.4%, overshadowing the % increase in Required Reserves ( % the Monetary Base) and the % increase in & OFCs' Excess Reserves ( % the Monetary Base). From the end March to the end April, the multipliers M, M and M increased from to 1., from 3. to 3.7 and from to 4., respectively, reflecting that the growth the monetary aggregates exceeded the growth the monetary base. (*) Monetary aggregates are defined in a footnote to Table 1
(*) which: Currency Issued Table 1. UAE Monthly Monetary Survey (April 2016) (End period, billions ) Dec. March April June Sept. Dec. Jan. Feb. March April In billions Change in April % Change Cash at - Currency in Circulation Outside Monetary Deposits(**) % Year on Year Change which: Quasi-Monetary Deposits(***) which: Government Deposits Estimates, subject to revision (*) M = Currency in Circulation Outside (Currency Issued - Cash at banks) + Monetary Deposits M = M + Quasi-Monetary Deposits M = M + Government Deposits (**) Monetary Deposits: all short term deposits on which bank customer can withdraw without prior notice (***) Quasi-Monetary Deposits: Resident Time and Savings Deposits in Dirham + Resident Deposits in Foreign Currencies % -
Table 2. Contribution to Aggregate Money Supply April MoM Year to Date Dec. Dec. Dec. Jan. Feb. March In billions Shares the Aggregates In Billions % Change Contribution to Aggregate Growth * In Billions % Change Currency in Circulation Outside Monetary Deposits Currency in Circulation Outside Monetary Deposits Quasi-Monetary Deposits - Currency in Circulation Outside Monetary Deposits Quasi-Monetary Deposits - Government Deposits Estimates, subject to revision * Contribution to aggregate growth = Shares the sub-aggregate times percent change in each sub-aggregate, such that contribution sub-aggregates equals percent change in the aggregate
Table 3. Money Multiplier in the UAE (End period, billions ) December December December January February March April Change in April 2016 In billions % Change Monetary Base Currency Issued* % Required Reserves & OFCs' Excess Reserves Certificates Deposit purchased by Money Supply (M ) Money Multiplier M (M /Monetary Base) Money Supply (M ) Money Multiplier M (M /Monetary Base) Money Supply (M ) % Money Multiplier M (M /Monetary Base) Estimates, subject to revision * Currency Issued = Currency in circulation outside + Cash at
increased by 0.6%, driven by a 1.5% rise in Currency in Circulation Outside & a 0.5% rise in Monetary Deposits. decreased by 1.3%, due to a 2.5% reduction in Quasi- Monetary Deposits. Monetary Deposits (left axis) Quasi- Monetary Deposits (left axis) % Change in M1 (right axis) % Change in M2 (right axis) 500.0 300.0 100.0-100.0 4.0% 2.0% 0.0% -2.0% 800.0 600.0 400.0 200.0 0.0 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% increased by 0.01%, owing to a 9.9% increase in Government Deposits. Government Deposits (left axis) % Change in M3 (right axis) 300.0 250.0 200.0 150.0 100.0 50.0 0.0 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 3.0% 1.0% -1.0% -3.0% Source: RSD - CBUAE
Monetary Base contracted by 1.5% during April 2016. 160 Change in Monetary Base (right axis) Required Reserves Certificates Deposit purchased by Currency Issued & OFCs' Excess Reserves 140 120 100 80 60 40 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% 20-10.0% 0 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16-15.0% Source: CBUAE