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Domestic Liquidity Growth Rises in November

01.08.2020

Preliminary data show that domestic liquidity (M3) expanded by 9.8 percent year-on-year to about ₱12.4 trillion in November 2019, faster than the 8.5-percent growth in October. On a month-on-month seasonally-adjusted basis, M3 increased by 1.7 percent.

Demand for credit remained the principal driver of money supply growth. Domestic claims grew by 8.3 percent in November from 6.7 percent in the previous month due mainly to the sustained growth in credit to the private sector. Loans for production activities continued to be driven by lending to key sectors such as real estate activities; financial and insurance activities; construction; and electricity, gas, steam and airconditioning supply.

Loans for household consumption increased due to faster growth in motor vehicle loans during the month. Meanwhile, net claims on the central government grew by 13.9 percent in November from 6.6 percent (revised) in October, due in part to the sustained increase in borrowings by the National Government.

Net foreign assets (NFA) in peso terms expanded by 11.5 percent in November from 9.6 percent in the previous month. The BSP’s NFA position increased during the month, supported by foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts.  Similarly, the NFA of banks increased as their foreign assets grew as a result of higher loans and investments in marketable debt securities.

The BSP will continue to monitor domestic liquidity dynamics to ensure that overall monetary conditions remain in line with maintaining the BSP’s price and financial stability objectives.

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