Central Bank Reports M1 Increase To AED 889.3 Billion At End Of July 2024

The Central Bank reported a rise in the money supply aggregate M1 by 0.6%, reaching AED889.3 billion at July's end, up from AED884.1 billion in June 2024. This increase was attributed to a rise of AED0.2 billion in currency outside banks and a AED5.0 billion boost in monetary deposits.

Gross banks' assets, including bankers’ acceptances, saw an increase of 0.9%, moving from AED4,310.2 billion at the end of June 2024 to AED4,348.6 billion by the end of July 2024.

The M2 money supply aggregate rose by 1.7%, from AED2,169.4 billion in June to AED2,205.9 billion in July 2024. This growth was due to the increase in M1 and a significant rise of AED31.3 billion in Quasi-Monetary Deposits.

Similarly, M3 also grew by 1.7%, climbing from AED2,632.0 billion at June's conclusion to AED2,676.0 billion by July's end. The expansion was driven by the growth in M2 and an additional AED7.5 billion in government deposits.

The monetary base experienced a decline of 1.0%, dropping from AED725.0 billion at the end of June to AED718.1 billion by July's close. This decrease resulted from reductions in currency issued by 0.5% and reserve accounts by 12%. These declines overshadowed increases in banks & OFCs’ current accounts & overnight deposits at CBUAE by 26.6% and monetary bills & Islamic certificates of deposit by 0.04%.

Gross credit saw a slight increase of 0.1%, rising from AED2,100.9 billion at June's end to AED2,102.1 billion by July's conclusion due to domestic credit growth of 0.3%. This domestic credit expansion offset a foreign credit decrease of 1.5%.

Banks' Deposits Growth

Banks' deposits increased by 1.6%, reaching AED2,736.0 billion at the end of July compared to AED2,692.5 billion at June's close due to rises in resident deposits by 1.5% and non-resident deposits by 2.4%.

Resident deposits grew with government sector deposits increasing by 0.6%, government-related entities deposits surging by 10.6%, and private sector deposits rising by 0.6%. However, non-banking financial institutions' deposits decreased by 1% at July's end.

Domestic credit growth was primarily driven by increases in credit to the government sector and private sector, which rose by 1.2% and 0.7%, respectively, despite decreases in public sector (government-related entities) credit and non-banking financial institutions credit falling by 1.9% and 1.2% respectively.

With inputs from WAM