Domestic liquidity (M3) expanded at a faster pace of 9.1 percent year-on-year in April from the 5.6 percent growth recorded a month earlier to reach P4.6 trillion. On a monthly basis, seasonally-adjusted M3 also increased by 2.2 percent after growing marginally (revised) in the previous month.
Money supply growth continued to be driven by the sustained expansion of net foreign assets (NFA) at 9.3 percent in April. The BSP’s own NFA position grew by 10.3 percent, supported by steady foreign exchange inflows from overseas remittances and portfolio investments. On the other hand, the NFA of banks continued to decrease in April due to the sustained rise in their foreign liabilities, combined with a decline in their foreign assets. Banks’ foreign liabilities rose due in part to higher placements and deposits made by foreign banks with their local branches while the fall in banks’ foreign assets was due largely to the contraction in loan receivables from foreign banks.
At the same time, net domestic assets (NDA) rebounded by 4.6 percent in April after contracting by 4.2 percent in the previous month due largely to the faster growth in net domestic credits, combined with a slower rise in the net other items account (which includes, among other things, revaluation and capital and reserve accounts as well as placements of authorized counterparties in the BSP SDA facility). Claims on the private sector also grew steadily by 18.7 percent, reflecting brisk bank lending activity.
The relatively more rapid domestic liquidity growth during the month reflects in part the impact of recent policy actions of the BSP to help support a non-inflationary economic growth. Going forward, the BSP will continue to monitor closely monetary conditions to ensure that liquidity in the financial system remains in line with the BSP’s price stability objective.