Wed. Dec 2nd, 2020

The Bangko Sentral ng Pilipinas (BSP) raising P80 billion from the latest weekly auction of its own securities shows there is still ample liquidity in the Philippine financial system amid the coronavirus disease 2019 (Covid-19) pandemic.

The BSP said that its P80-billion securities offering was oversubscribed by 1.8 times as it attracted bids of over P141 billion. The securities will mature on November 24.

In a statement, BSP Deputy Governor Francisco Dakila Jr. said the very positive response to the securities auction shows that liquidity remains ample in the domestic financial system.

“The BSP monetary operations will continue to be guided by its assessment of market developments and liquidity conditions,” he added.

Latest data from the BSP revealed the country’s money supply or domestic liquidity rose by 14.2 percent in August to P13.6 trillion compared to the figure last year.

BSP Governor Benjamin Diokno earlier said including the issuance of securities i is a tool the central bank utilizes to implementing monetary policy.

“This also promotes greater flexibility in managing liquidity in the financial system under the interest rate corridor framework,” he added.

Excess liquidity or money supply can result in higher inflation.

On October 11, the BSP raised P60 billion also from its own from security sales.

While it was able to raise P60 billion, the BSP said it got bids worth P109.20 billion, which means the security sale was oversubcribed by more than two times. 

“The sustained strong market interest for BSP bills continues to reflect ample liquidity in the financial system,” Dakila said in a statement issued on that day.

“Moving forward, the BSP will continue to refine and recalibrate the overall strategy of its current monetary operations, guided by its assessment of recent market developments and liquidity conditions,” he added. (sovereignph.com)

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