The central bank’s bid to put a firmer lid on the inflation rate —by siphoning off more idle pesos from the local economy —was met with lukewarm reception by financial institutions which were unimpressed by the regulator’s willingness to pay more for deposits.
Data from the Bangko Sentral ng Pilipinas (BSP) yesterday showed that banks submitted only P98.3 billion worth of tenders for the weekly term deposit facility auction, despite authorities’ offer to accept as much as P120 billion.
This marked a sharp reversal from the previous week’s results where banks scrambled to place as much as P129.7 billion in idle funds in the BSP’s vaults where only P80 billion was accepted.
The 7-day facility drew only P42.5 billion worth of tenders from banks, even though the central bank was willing to accept as much as P50 billion. Authorities ended up accepting all that banks were offering, with the yield rising to 3.5866 percent from the previous week’s 3.5123 percent.
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The 14-day instrument was undersubscribed with banks tendering only P32.1 billion for the P40 billion on offer. Regulators made a full award with yield declining slightly to 3.5783 percent from last week’s 3.5855 percent.
The yield on the 28-day instrument rose more substantially to 3.5716 percent from the previous week’s 3.4979 percent. Banks tendered only P23.7 billion worth of bids for the P30 billion on offer. The offer volume for the longest-dated securities were increased by the BSP to sterilize more cash from the financial system that would otherwise aggravate the domestic inflation rate.
