Domestic liquidity up 11.85% in August

liquidity (M3) continued to expand in August due to sustained demand for credit, the Bangko Sentral ng Pilipinas (BSP) reported on Friday, GMA News reported.

M3 or the amount of money circulating in the financial system grew by 11.8 percent to P8.7 trillion, preliminary data from the BSP showed. This was slower than the 13.1-percent increase recorded in July.

On a month-on-month seasonally-adjusted basis, M3 decreased by 0.2 percent.

Domestic claims grew by 14.9 percent in August from 16.5 percent in July on the back of a sustained increase in credits to the private sector.

Growth in bank loans continued to be driven by key production sectors such as real estate activities; electricity, gas, steam and airconditioning supply; and wholesale and retail trade, repair of motor vehicles and motorcycles.

Net claims on the central government also rose by 18.2 percent during the month from 25.4 percent a month earlier as a result of withdrawals by the national government of its deposits with the BSP.

Net foreign assets (NFA) in peso terms grew by 8.8 percent in August from 12.5 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,” the central bank said.

The NFA of banks also expanded, driven largely by the increase in banks’ foreign assets resulting from deposits with other banks and investments in marketable debt securities.

“The data suggests that the expansion in M3 remains manageable and consistent with ensuring noninflationary growth,” the BSP said.