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Japan’s currency in circulation and bank deposits rose at a record pace in September, data showed on Tuesday, as companies and households hoarded cash instead of spending it due to uncertainty over the coronavirus pandemic.
The data underscores the fragile nature of Japan’s economic recovery, which is heavily reliant on overseas demand as consumption and capital expenditure remain weak.
Japan’s M3 money stock — or currency in circulation and deposits at financial institutions — rose 7.4 per cent in September from a year earlier, marking the biggest increase since comparable data became available in 2004, Bank of Japan data showed.
The rise topped a 7.1 per cent gain in August. Bank deposits surged a record 15.5 per cent in September from a year earlier, while cash in circulation grew 5.7 per cent, the data showed.
“What’s happening since spring through summer is that households are curbing spending and saving the payouts they received from the government,” a BOJ official told a briefing. Japan suffered its biggest economic slump on record in the second quarter as the pandemic crippled demand.
Analysts expect any rebound to remain modest as fears of a second huge wave of infections weigh on consumption.