The city’s foreign exchange reserves totalled MOP152.7 billion (US$19.02 billion) as at the end of May, a slight year-on-year increase of 1.4 per cent compared to MOP150.5 billion one year ago, a preliminary estimate of the Monetary Authority of Macau (AMCM) reveals.
In addition, on a month-on-month comparison, the amount of local foreign exchange reserves represents a slight growth of 0.9 per cent, compared to MOP154.1 billion in April.
As at the end of the month, the city’s foreign exchange reserves represented 11 times the currency in circulation, or 87.9 per cent, of Pataca M2.
’M2’ refers to that part of the money supply that includes physical coins and currency, as well as readily liquid assets such as on-demand bank deposits and money held in cheque accounts plus all time-related deposits, savings deposits, and non-institutional money market funds.
Meanwhile, the trade-weighted effective exchange rate index for the Pataca (MOP) went down 0.89 points month-to-month but hiked by 2.31 points year-on-year to 107.7 in May of this year.
The data suggests the city’s official currency has grown against the currencies of the city’s major trading partners on a monthly basis, while dropping on an annual basis.
Base rate going up
AMCM also announced yesterday it had raised the base rate up by 25 basis points to 1.5 per cent after Hong Kong’s rate went up to match U.S. rates ordered by the Federal Reserve. The base rate is the discount window rate charged to commercial banks to get funding from the AMCM, with the Macau Pataca pegged indirectly to the U.S. dollar via the Hong Kong dollar.
This is the fourth time since December 2015 that AMCM has raised the base rate.
‘Macau’s loan and deposit rates remain relatively stable at the current stage. Nevertheless, if the uptrend of interest rates persists, uplifting loan and deposit interest rates by Macau banks cannot be ruled out in the foreseeable future,’ the department stated.
The department advised local residents to ‘be alerted to the potentially enlarging volatility of the real estate market’ and assess the ‘extra burden on their mortgage payments due to rising interest rates’.