Money supply grows a bit slower in April —BSP

Money supply grew by 14.2 percent in April, slightly than the 14.4 percent in March, the Bangko Sentral ng Pilipinas (BSP) said Friday.

Central bank data showed domestic liquidity or M3—the broadest measure of money circulating in the financial system—stood at P10.9 trillion in April compared with P10.914 trillion in March.

“Overall domestic liquidity conditions remain broadly in line with the BSP’s prevailing outlook on inflation and economic activity,” the central bank said in a statement.

Land Bank of the Philippines market economist Guian Angelo Dumalagan said there was actually no significant change in the level of domestic liquidity.

“The notable increase happened in March when the BSP reduced the RRR. From March until now, growth is somewhere in the 14-percent level,” Dumalagan said.

The central bank, in March, lowered the reserve requirement ratio (RRR) by 1 percentage point from the 20 percent.

“In June, liquidity growth might pick up further due to the second cut in RRR, which could fuel rise in loans,” the economist noted.

Effective June 1, the BSP reduced anew the RRR to 18 percent.

The RRR is the amount of cash a bank must hold in its reserves against deposits made by customers. The Philippines currently has one of the highest RRRs in the world.

Domestic claims grew by 16.4 percent in April, higher than the revised 14.5 percent in March due to sustained growth in bank lending, according to the BSP.

The growth in bank loans continued to drive up lending to key production sectors such as wholesale and retail trade, repair of motor vehicles and motorcycles; real estate activities; financial and insurance activities; electricity, gas, steam and air conditioning supply; manufacturing; other community, social and personal activities; transportation and storage; and information and communications.

Net claims against the central government rose by 13.0 percent in April from 7.0 percent as a result of continued borrowing by the national government.

Net foreign assets in peso terms grew by 4.2 percent year-on-year in April from 5.6 percent in March.

“Foreign exchange inflows coming mainly from overseas Filipinos’ remittances, business process outsourcing receipts, and foreign portfolio investments drove the growth in the BSP’s net foreign assets position,” the central bank said.

“The net foreign assets of banks also expanded as banks’ foreign assets increased on account of higher loans and investments in marketable debt securities,” it said.

The central bank intends to continue monitoring closely domestic liquidity to ensure that monetary conditions are conducive to maintaining price and financial stability. —VDS, GMA News