OREANDA-NEWS  On 09 October was announced, that the money supply (M3) went up by 0.2% in September (1.6% in August) and by 20.2% over 9M2008 (33.6% in 9M2007) to USD 98.1bln. At the same time, M0 fell by 0.3% in September (up 2.3% in August), amounting to 28.1% of the total money supply. Banks' credit portfolios rose by 3.3% (28.4% over 8M2008) to USD 116.7bn, mainly due to an increase in corporate loans by 3.8%. The deposit amount increased by 1.0% in September (1.4% in August) to USD 70.1bn. The deposit interest rate in domestic currency rose from 9.0% to 9.8%, while the loan interest rate decreased from 17.3% to 16.8%.

The money supply growth in September 2008 was one the lowest in the last ten years. This was related to the slow down in overall business activity and a decrease in the purchasing power of the population (waged down 3%, m/m in August). Meanwhile the slow down in the loan interest rate maintained the steady growth of banks’ credit portfolios. We consider that the money supply growth will be quite restricted in October (around 2%, m/m) due to a further decline in industrial production, though it may accelerate in 4Q2008, contributing to around 30% growth in 2008.