Shan Mohammad (MBA-IB) Pondicherry University

1. Money Supply

2. Introduction
The total stock of money circulating in an economy is the
money supply. The circulating money involves the currency,
printed notes, money in the deposit accounts and in the
form of other liquid assets.

3. ApproachesMoneysupply

4. Functions of Money

5. Measures of Money Supply
M1= C+DD+OD
M2= C+DD+OD+POSBD
M3= C+DD+OD+TD
M4= C+DD+OD+TD+TPOD

6. ImpactofmoneysupplyinForex
An increase in a country’s money supply causes its currency to
depreciate in forex market.
A decrease in a country’s money supply causes its currency to
appreciate in forex market.
It is showing indirect relationship between money supply & Currency.
MS = C (Vice versa)

7. Recent quarterly trend of Indian money supply

8. India
Money
Last Previous Highest Lowest Unit
Interest Rate 6.50 6.25 14.50 4.25 percent
Cash Reserve
Ratio
4.00 4.00 10.50 4.00 percent
Interbank Rate 6.81 6.77 12.97 3.10 percent
Money Supply
M1
31891.30 31639.00 32788.10 80.15 INR Billion
Money Supply
M2
32980.70 32897.08 32980.70 1127.49 INR Billion
Money Supply
M3
142070.49 141370.26 142070.49 123.52 INR Billion
Central Bank
Balance Sheet
16198.64 16484.25 23419.03 1624.31 INR Billions
Foreign Exchange
Reserves
401290.00 400850.00 426080.00 29048.00 USD Million
Loan Growth 12.90 12.70 18.70 4.10 percent
Reverse Repo
Rate
6.25 6.00 13.50 3.25 percent
Data of money supply in India

9. Forecasting trend of money supply

10. India Money Last Q3/18 Q4/18 Q1/19 Q2/19 2020
Interest Rate 6.5 6.5 6.75 6.75 6.75 5.75
Cash Reserve
Ratio
4 4 4 4 4 4
Interbank Rate 6.81 6.81 7.06 7.06 7.06 6.06
Money Supply
M1
31891 31310 31385 31274 31327 31326
Money Supply
M2
32981 33072 32924 32964 32965 32960
Money Supply
M3
142070 143013 145790 148540 151281 178398
Central Bank
Balance Sheet
16199 16701 16649 16595 16621 16617
Foreign
Exchange
Reserves
401290 398550 394810 392878 391882 390822
Loan Growth 12.9 12.86 12.5 12.86 12.86 12
Reverse Repo
Rate
6.25 6.25 6.5 6.5 6.5 5.5
Forecasting of money supply

11. THANK
YOU