Cash circulating in PH economy grew faster in July as markets anticipated BSP rate cut

For the third consecutive month this year, cash and “near cash” items circulating in the Philippine financial system grew above 6% in July this year as the market anticipated the August interest rate reduction promised by the Bangko Sentral ng Pilipinas.

Preliminary data from the BSP showed that domestic liquidity rose 7.2% year-on-year in July 2024, reaching approximately P17.5 trillion.

This marked an acceleration from the 6.6% growth recorded in June which, in turn, followed the 6.5% growth in May.

The expansion in domestic claims contributed to this liquidity growth, rising by 11.3% in July compared to 10.5% in June.

Private sector claims grew by 11.9%, driven by ongoing increases in bank lending to non-financial private corporations and households.

Net claims on the central government surged by 14%, up from 12.1% in the previous month, reflecting sustained government borrowing.

Net foreign assets in peso terms also saw significant growth, rising by 11.2% year-on-year in July, up from 8.3% in June. The BSP’s net foreign assets increased by 13.8%, while those of banks decreased, mainly due to higher bills and bonds payable.