The central bank said domestic liquidity rose 8.2 percent year-on-year to 14.64 trillion pesos in October, slightly lower than the 8.3 percent expansion in September.
The Bangko Sentral ng Pilipinas (BSP) in a statement Monday, November 29, said it “will ensure appropriate liquidity conditions” to preserve “continued political support for national economic activity (which is) consistent with its objectives of price and financial stability. “
“Monetary authorities will patiently remain dependent on the data to maintain monetary accommodation to help support a sustainable recovery from the pandemic,” BSP said.
Based on the latest preliminary data on domestic liquidity or M3, on a seasonally adjusted monthly basis, M3 increased by 0.7%.
The BSP said national claims rose 7.5% year-on-year in October from 7.7% in September. This has increased on the back of larger net claims on the central government and bank lending to the private sector which turned positive in the past three months.
Net claims on the central government increased by 21.5% versus 24.4% due to sustained borrowing from the national government. Private sector claims, which the BSP said were drawn by bank loans to private non-financial corporations, rose 2.6% in October from 3.1% in September.
Net foreign assets (NEA) in pesos also rose 8.8% in October from 11.3% in September. BSP said its stance on the NFA was “moderate” in October. He added that banks ‘NFE was increasing at an “overall stable rate” as foreign banks’ assets improved due to increased deposits from local branches of foreign banks.
In mid-November, the BSP injected 2.3 trillion pesos in liquidity into the financial system as part of its response to the pandemic.
At the start of the pandemic in 2020, the BSP applied extraordinary liquidity measures to help the government fund anti-pandemic measures. These include interim advances to the national government, purchases of government securities on the secondary market, and the payment of early dividends even though the BSP is no longer required to pay dividends to the government.
Other measures, which injected new liquidity into the financial system mainly to “strengthen market confidence” and to ensure “the availability of low-cost credit resources”, include interest rate cuts of 200 percentage points. basis of the BSP and reduction of the reserve requirement ratio.
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