UAE Central Bank foreign assets reach Dhs392.4bn by end of Q1 2021

The foreign assets held by the Central Bank of the United Arab Emirates (CBUAE) increased to Dhs392.4bn by the end of Q1 2021, a quarter-on-quarter increase of 1.1 per cent, a CBUAE report shows.

The apex bank attributed the growth mainly to Dhs85.9bn quarterly increases in foreign securities and other foreign assets by 25.7 per cent (Dhs9.2bn), overshadowing a reduction in current account balances and deposits with banks abroad by 26.1 per cent (Dhs90.7bn).

From March 2020 to March 2021, Central Bank Foreign Assets increased by 0.4 per cent, year-on-year, added the report.

With regards to the country’s twin bourses, the report said Abu Dhabi’s quarterly average Financial Market Index rose by 17 per cent during Q1 2021. The quarterly average market capitalisation of companies listed at the Abu Dhabi Securities Exchange (ADX) increased by Dhs101bn reaching Dhs826.7bn at the end of the first quarter of 2021.

The Quarterly Traded Value also rose by 74.7 per cent during the first quarter of 2021 reaching Dhs50.3bn. However, on an annual basis, the Abu Dhabi Financial Market Index fell 3.3 per cent.

Dubai’s quarterly average Financial Market Index showed a growth of 9.2 per cent during Q1 2021. The quarterly average market capitalisation of companies listed on the Dubai Financial Market (DFM) increased by Dhs25.2bn reaching Dhs353.9bn by the end of the first quarter of this year. Quarterly Traded Value rose 4.8 per cent during the Q1 2021 reaching Dhs15.4bn. On an annual basis, the Dubai Financial Market Index decreased by 14.1 per cent.

In the meantime, Money Supply M1, which comprises currency in circulation outside banks (Currency Issued – Cash at banks) plus monetary deposits, increased by 7.1 per cent quarter-on-quarter during the Q1 2021. On an annual basis, it climbed 18.4 per cent year-on-year in the monetary aggregate M1, reaching Dhs642.3bn at the end of March 2021.

Money Supply M2 (M1 plus quasi monetary deposits — Resident Time and Savings Deposits in Dirham, plus Resident Deposits in Foreign Currencies), also increased by 0.6 per cent quarter-on-quarter during Q1 2021.

On an annual basis, there was a 2.2 per cent year-on-year increase in Money Supply M2, reaching Dhs1,487.5bn at the end of the first quarter of 2021. Money Supply M3 (M2 plus government deposits at banks and at the Central Bank) fell by 0.2 per cent quarter-on-quarter during Q1 2021. On an annual basis, there was a 3.1 per cent year-on-year growth in Money Supply M3, reaching Dhs1,766.4bn at the end of March 2021.

Typically, the money supply M2 is considered as a good indicator for the availability of liquidity in the economy, as it comprises currency in circulation outside banks, in addition to various deposits of all the resident sectors in dirham denomination, except for the deposits of the government sector in the UAE.

Read: Overall liquidity in UAE banking system back to pre-Covid levels – Central Bank

The data showed that at the end of the first quarter of 2021, there was a quarter-on-quarter increase in M2. The rise in M2 during Q1 2021 was mainly due to a 0.6 per cent quarterly increase in the non-government resident deposits standing at Dhs1,391.6bn by the end of March 2021.

In March, the CBUAE said that the overall liquidity of the nation’s banking system has returned to pre-Covid levels.