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Domestic Liquidity Continues to Expand in November

12.29.2015

Preliminary data show that domestic liquidity (M3) grew by 9.2 percent year-on-year in November 2015 to reach P8.0 trillion. This growth is unchanged from the 9.2-percent (revised) expansion recorded in October. On a month-on-month seasonally-adjusted basis, M3 decreased by 0.3 percent.

Money supply continued to expand due largely to sustained demand for credit. Domestic claims grew by 11.6 percent in November from 11.3 percent (revised) in October. Credits to the private sector increased at a broadly steady pace relative to the previous month. The bulk of bank loans during the month was channeled to key production sectors such as real estate activities; electricity, gas, steam and airconditioning supply; wholesale and retail trade, and repair of motor vehicles and motorcycles; financial and insurance activities; and construction. Meanwhile, net public sector credit rose by 10.5 percent in November, slower than the 11.6-percent growth (revised) a month earlier.

Net foreign assets (NFA) in peso terms grew by 9.0 percent in November from  8.2 percent in the previous month. The BSP’s NFA position continued to expand during the month on the back of robust foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts. The NFA of banks likewise increased as banks’ foreign assets expanded at a faster pace relative to that of their foreign liabilities. Banks’ foreign assets increased due largely to the growth in their investments in marketable debt securities, while banks’ foreign liabilities grew mainly on account of higher deposits and placements made by foreign banks with other banks.

The sustained expansion of M3 during the month indicates that money supply remains sufficient to support economic growth. Going forward, the BSP will continue to monitor domestic liquidity dynamics to ensure that monetary conditions remain in line with price and financial stability.

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