Jakarta (Indonesia Window) – Indonesia’s economic liquidity or money supply in a broad sense (M2) in October 2021 increased by 10.4 percent compared to the same period last year (year-on-year) to 7,490.7 trillion rupiahs (some 524.7 billion U.S. dollars).

This figure was higher than the previous month at 8.2 percent (yoy), according to Indonesia’s central bank, Bank Indonesia (BI).

"This increase was driven by the acceleration of growth in the narrow money supply (M1) by 14.6 percent (yoy) and quasi money which grew by six percent (yoy)," said BI's Chief Executive Director of Communications Erwin Haryono in an official statement here on Tuesday (Nov. 23).

M2 growth in October 2021 was influenced by net foreign assets and net domestic assets, he added.

Erwin explained that M1 growth was driven by an increase in the growth of rupiah demand deposits, as well as rupiah savings that could be withdrawn at any time.

Rupiah demand deposits in October 2021 grew 21.4 percent (yoy), higher than the previous month's 10.3 percent (yoy), but were slightly restrained by the slowdown in electronic money float funds which were recorded at 7.9 trillion rupiahs (some 553.4 million dollars) with a share of M1 at 0.19 percent, or grew by 5.7 percent (yoy), slowing down from 20.2 percent (yoy) in the previous month.

Rupiah savings that could be withdrawn at any time in October 2021 were recorded at 2,006.3 trillion rupiahs (about 140.5 billion dollars), with a share of 49.2 percent against M1, or grew 13 percent (yoy) compared to September 2021 of 11.8 percent (yoy).

On the other hand, net foreign assets grew by 5.7 percent (yoy) compared to growth in September 2021 of five percent (yoy), which was caused by a slowdown in the monetary system's obligations to non-residents, particularly in the form of foreign exchange loans.

Meanwhile, net domestic assets increased by 12.1 percent (yoy), up from 9.3 percent (yoy) in the previous month, in line with higher net claims to the central government and continued loaning.

"Net claims to the central government grew by 30.4 percent (yoy), an increase compared to the previous month of 16.1 percent (yoy), which was caused by a slowdown in the monetary system's obligations to the central government in the form of deposits both in rupiah and foreign currencies," he said.

Meanwhile, loaning increased by three percent (yoy) in the month under review, up from the previous month's growth of 2.1 percent (yoy), in line with increases in the distributions of loans for working capitals and consumptions.

Reporting by Indonesia Window