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The Philippine central bank said its holdings of government bonds rose almost 400% during the pandemic, and outlined a strategy of carefully reducing purchases when the economic recovery becomes sustainable.

Bangko Sentral ng Pilipinas’ outstanding government securities holdings was 1.52 trillion pesos ($30.2 billion) at end-June, up from 313.9 billion pesos at end-2019, it said in an emailed reply to questions Tuesday.

As economic recovery becomes more sustainable, the central bank said it will “carefully unwind some of the government security purchases as part of its exit strategy from extraordinary monetary accommodation,” without giving a timeframe. In the meantime, BSP said it will continue to “provide support to market players and ensure there is sufficient liquidity in the system.”

The surge in its holdings came after the central bank opened a daily one-hour buying window in the secondary bond market in March last year, aimed at maintaining smooth functioning of financial markets amid heightened risk aversion, the monetary authority said. The yield on benchmark 10-year bonds are holding at less than 4%, still below a high of 5% in March 2020.

Read: Philippine BSP Says Bond Purchases About 20% of Daily Volume

The fragility of the Philippine recovery may mean it will take some time before the central bank moves to reduce its bond purchases. The economy fell back into contraction in the second quarter compared to the previous three months, as elevated numbers of Covid cases and extended lockdowns place the nation among Asia’s laggards.

BSP said buying and selling of bonds will be incorporated in its management of money supply.

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