— Japan Aug M3 Money Stock +2.1% Y/Y Vs July +2.0%

TOKYO (MNI) – Japan’s money stock, measured by the key M2
aggregate, rebounded slightly to 2.8% y/y in August from +2.7% in July
after having decelerated each of the previous two months, the Bank of
Japan said on Wednesday.

Money stock growth had accelerated in the March-May period,
reaching a recent peak of 3.1% in May.

The August rate remained below the record rise of +3.4% marked in
October 2009. The 3.4% rise in October 2009 was the highest M2 growth
rate under the “money stock” data formula adopted in 2008 and was also
higher than the record 3.2% rise marked in November 2002 under the
“money supply” series, historical data showed.

Japan’s M3 money stock aggregate also rebounded to 2.1% y/y
from 2.0% in July. Like M2, M3 growth peaked in May — at 2.3% — and
decelerated each of the next two months.

M3 growth hit a record growth of +2.4% in October and November
2009. The 2.4% rise was the highest growth under the new formula and
also surpassed the record 2.1% rise in M3 hit in May 2000 under the
previous one.

The August M2 growth came in slightly higher than the consensus
call for a further deceleration to 2.6%. The M3 figure was also higher
than the average economist forecast of a 2.0% rise.

In June 2008, the BOJ changed its measures for money supply data in
lined with the privatization of Japan Post Bank Co. in October 2007.

The central bank has created the M3 category, which comprises M2
plus certificates of deposits and deposits at the postal bank, credit
unions and agricultural cooperatives among other lenders.

The BOJ now calls its main money supply measure simply M2,
replacing the previous M2 plus CDs designation.

The BOJ continues to focus on both M2 and M3 data to gauge economic
activity at the moment as the bank has no long-term historical data on
the M3 aggregate yet.

Quasi-money — cash equivalent and other assets that are easily
convertible into cash — rose 0.8% in August from a year earlier,
slowing from the 1.1% rise in July.

The narrow measure of money supply, M1, which consists of currency
in circulation and deposit money, rose 2.1% on year in August, after
rising 2.0% in the previous month.

Certificates of deposit were up 28.3% in August, after rising a
revised 23.5% (preliminary +23.4%) in July.

tokyo@marketnews.com
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