Growth in money supply fell for the second straight month in April, rising 1 percentage point, or 3.5 percent on a year-on-year basis, less than in March, according to Bank of Japan figures released Tuesday.

The indicator, which measures M2 — currency in circulation, demand and time deposits — plus certificates of deposit, came to a balance of 589.7 trillion yen. With the inclusion of foreign banks operating in Japan and shinkin credit unions, the figure came to 592.5 trillion yen.

Bank officials noted that the shift of funds from financial instruments not covered by the money supply gauge — investment trusts, for example — to deposits, which began in November, appears to have peaked out. But they added that they still see the indicator as being at a high level.

Observers say they believe the decline in growth in money supply is also due to the fact that corporations are less in need of funds because of the economic slowdown. Meanwhile, the broad measure of liquidity — which includes postal savings, government bonds and investment trusts — grew at an average rate of 2.4 percent on an unadjusted basis in April, the slowest growth since March 1993 and down from 3 percent in March. BOJ officials attributed the slowdown to decreased bank loans.

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