Bahrain sees slowdown in money supply growth

Growth in money circulating in economy fell for fourth month in Jan - central bank.
Bahrain sees slowdown in money supply growth
By Daliah Merzaban
Wed 04 Mar 2009 12:46 PM

Bahraini money supply growth fell for a fourth month running to 16.4 percent in January, its slowest annual rise in almost two years, in the latest signal that inflationary pressures are easing in the Gulf region.

M3, the broadest measure of money circulating in the Bahraini economy, was BD7.79bn ($20.67bn) at the end of January compared with BD6.69bn a year earlier, the central bank said in a monthly report on its website.

Annual growth in money supply fell from 21 percent in December and was the slowest rise since March 2007.

As in other states in the world's biggest oil-exporting region, Bahrain's money supply surged as oil prices rallied to a peak last July above $147 a barrel.

Oil prices have since fallen more than $100 a barrel and rapid economic growth in the Gulf has come to an end as the region suffers the fallout of a global financial crisis that has sent much of the industrialised world into recession.

Citing a decline in inflation, Bahrain's central bank on Tuesday cut the amount of reserves that banks are required to hold to five percent from seven percent, a measure analysts said was designed to unlock credit markets.

Money supply in January fell from BD7.98bn in December.

Cash held in time and savings deposits rose 13.7 percent, down from growth of 17.5 percent at the end of last year, the data showed. Demand deposits grew 14.8 percent in January.

The central bank's net foreign assets rose to BD1.29bn in November from BD1.2bn a month earlier, the data showed.

Claims on the private sector in November rose to BD6.27bn from BD6.23bn in October. (Reuters)

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