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Location: Dubai, UAE - Regional Commercial Manager
Location: Dubai, UAE
Bahrain's money supply soars
by Daliah Merzaban on Thursday, 27 March 2008
CASHED UP: M3, the broadest measure of money supply in an economy, shot up by almost two billion dinars last year, the central bank revealed. (Getty Images)
Growth in Bahraini money supply accelerated in February to 37.6%, on par with its fastest pace of growth in at least six years, as inflationary pressures pick up pace across the Gulf Arab region.
M3, the broadest measure of money circulating in the economy, jumped to 6.92 billion dinars ($18.36 billion) on February 29, compared with 5.03 billion dinars a year earlier, the central bank said in a monthly report.
Growth in Bahraini money supply, an indicator of future inflation, was 36.3% in January. It accelerated by 37.6 in November, its fastest pace of growth since at least 2001.
Time and savings deposits jumped 44.5% to 4.1 billion dinars and demand deposits rose 27.4% to 1.59 billion dinars, the central bank said.
The central bank's net foreign assets more than doubled to 1.89 billion dinars in February from 881.8 million dinars a year earlier, data showed.
Like most of its neighbours in the world's biggest oil-exporting region, Bahrain pegs its currency to the dollar, forcing it to track US interest rate cuts and constraining its fight against inflation.
The dollar has plunged to record lows against the euro and a basket of currencies this month and the US Federal Reserve has slashed its benchmark rate by 3 percentage points in six months.
Money supply growth, driven by oil prices at record highs above $100 a barrel, is fuelling inflation across the Gulf Arab region.
Prices rose 0.2% in Bahrain in February from the previous month led by food costs. (Reuters)