Documents released by the Bangko Sentral ng Pilipinas (BSP) showed that the monetary agency posted a net loss of P19.21 billion at the end of the seven-month period. This was lower by 60.77 percent than the P48.97 billion in losses the BSP posted in the same period in 2012.
The BSP attributed the improvement to lower interest costs following cuts in the yields on SDAs as well as the lower total amount of money parked in the SDA facility. The BSP said it also benefited from the weaker peso, which made dollar-denominated assets more valuable in local currency terms.
“The depreciation of the peso yielded some gains for the BSP and [add to this the] lower interest expense on account of lower interest rate on SDA,” BSP Deputy Governor Diwa C. Guinigundo said in a text message.
Since the start of the year, the BSP has cut the interest rate on SDAs three times, each by 50 basis points. The moves have brought the rate to a historic low of 2 percent across all maturities.
These cuts were done to encourage banks to shift funds away from the SDA facility, which was devised as a tool for mopping up liquidity and not as an investment instrument.
Likewise, the BSP earlier this year introduced restrictions that banned non-pooled funds from being parked in SDAs.
Banks were also ordered to remove individual investments from SDAs on a staggered basis, with an initial 30 percent in July and the remaining 70 percent by November.
Money in SDAs at the end of July this year totaled P1.78 trillion, down from the peak of P1.92 trillion last February. As of August, cash in SDAs went down further to P1.63 trillion, BSP documents showed.
The release of funds from SDA accounts has led to decade-high growth rate in domestic liquidity or M3 at the end of July. The BSP said it expected M3 growth rates to decelerate once adjustments in SDAs have been completed.