Domestic liquidity (M3) continued to increase in June, expanding by 7.1 percent year-on-year to reach P4.7 trillion. The growth in M3 was slower compared to the 7.9 percent growth recorded a month earlier. On a monthly basis, the rise in seasonally-adjusted M3 was 1.9 percent, higher relative to 0.1 percent (revised) in May.
Money supply growth continued to be driven by the sustained expansion of net foreign assets (NFA), which grew by 5.1 percent in June, slower than the 9.6 percent in May. The BSP’s NFA position increased by 7.7 percent, supported by steady foreign exchange inflows from overseas remittances and portfolio investments. Meanwhile, the NFA of banks continued to decrease in June as their foreign liabilities rose while their foreign assets declined. Banks’ foreign liabilities increased further due in part to higher placements and deposits made by foreign banks with their local branches.
The growth of net domestic assets (NDA) accelerated to 5.8 percent from 2.9 percent in May due largely to the faster growth in lending to the private sector. Claims on the public sector likewise increased by 5.6 percent in June. Meanwhile, the net other items account continued to post strong growth owing to higher placements of eligible counterparties in the BSP SDA facility.
The steady growth in domestic liquidity indicates that overall liquidity conditions remain sufficient to support the economy’s growth requirements. The BSP will continue to monitor closely monetary conditions to ensure that liquidity in the financial system remains supportive of economic activity in line with the BSP’s objective of maintaining price stability.