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Domestic Liquidity Continues to Increase in March

04.29.2016

Preliminary data show that domestic liquidity (M3) grew by 11.7 percent year-on-year in March to reach P8.5 trillion. This was faster than the 11.2-percent (revised) expansion recorded in February. On a month-on-month seasonally-adjusted basis, M3 increased by 1.7 percent.

Money supply continued to expand due largely to sustained demand for credit. Domestic claims grew by 15.3 percent in March from 16.1 percent in February as credits to the private sector increased at a slower 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 information and communication. Net public sector credit also rose by 33.4 percent in March, faster than the 28.9-percent (revised) growth a month earlier.

Net foreign assets (NFA) in peso terms grew by 5.9 percent in March from  9.3 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, business process outsourcing receipts, and portfolio investments. Meanwhile, the NFA of banks also increased, driven largely by the increase in banks’ foreign assets resulting from investments in marketable debt securities.

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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