Financial institutions yesterday swamped the central bank’s liquidity management facility, tendering over twice the amount on offer for the first term deposit facility of the year.
According to the Bangko Sentral ng Pilipinas, banks put up a total of P95.5 billion in bids for the P40 billion offered over a seven-day tenor by the monetary authority.
The term deposit facility is a tool used by the BSP to immobilize excess liquidity in the local financial system that could otherwise be used for unproductive speculative activities in the local markets.
Yesterday’s auction saw the weighted average rate slip to 3.3654 percent from the 3.3995 percent during the previous auction of Dec. 27, 2017.
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It also marked the third week in which the central bank sought tenders for only the seven-day facility, setting aside the 28-day facility which was previously used to siphon off the bulk of the market liquidity.
BSP Governor Nestor Espenilla said the reduction in the TDF auctions reflected prevailing market conditions.
