MANILA — The Bangko Sentral ng Pilipinas (BSP) cut the offering for its 14-day Term Deposit Facility (TDF) up for auction on September 26, 2018 by half to PHP10 billion on the expected drop in excess liquidity in the coming weeks.
On the other hand, offering for the seven-day facility is still at PHP40 billion and the 28-day facility at PHP10 billion.
BSP Deputy Governor Diwa Guinigundo said the decision to lower the offer volume was made “because our liquidity forecasts indicate lower excess liquidity in the system.”
He explained that “more funds are going into loans, investments and dollar purchases.”
“This is auspicious because the banks are doing a good job in financial intermediation especially in the face of government infrastructure projects aimed at addressing our large infrastructure gap and enhance our productive capacity,” he said.
The central bank official added that “OMO (open market operation) is precisely aimed at fine-tuning the level of domestic liquidity.”
In the past, the central bank has cut TDF volume offering because banks submitted lower tenders on increased liquidity requirements by their clients during the holiday season, among other reasons.
Meanwhile, TDF rates have been on the rise in the past weeks but result of this week’s auction registered a mix, with the seven-day and 14-day facilities’ interest rates up contrary to the decline for that of the 28-day facility.
Rate of the shortest tenor TDF rose to 4.3884 percent Wednesday from last week’s 4.3744 percent.
Weighted average accepted yield of the two-week facility rose to 4.4339 percent from 4.4224 percent during the auction last September 12.
On the other hand, average yield of the 28-day facility went down to 4.4754 percent from 4.4824 in the previous week.
Authorities have attributed the increase in TDF rates in the past to expectations for another hike in the BSP’s key policy rates during the rate setting meet of the central bank’s policy-making Monetary Board (MB) as inflation continues to rise. (Joann Villanueva/PNA)
