Tight liquidity in the local financial system pushed yields on the central bank’s antiinflation management facility higher for the second time in a row yesterday, aggravated by banks’ muted interest in the short term deposits.
At the weekly auction for the term deposit facility of the Bangko Sentral ng Pilipinas, interest rates across all three tenors rose even as the longer dated instruments continued to be undersubscribed, echoing the previous week’s results.
“There is no [cash] volume in the market,” said the treasurer of a commercial bank speaking on condition of anonymity. “And there is little appetite among banks for the TDF right now. But it’s more a situation of tight liquidity.”
The central bank had been using the term deposit facility as a proxy for its overnight borrowing facility in a bid to sterilize excess cash in the financial system that could further aggravate the five-year high inflation rate.
BUSINESS
BUSINESS
BUSINESS
During Wednesday’s auction, the seven-day instrument attracted P45.8 billion worth of bids for the P40 billion that the central bank had offered. The regulator accepted a total of P40 billion, with the yield rising to 3.7523 percent from last week’s 3.6927 percent.
The 14-day instrument, on the other hand, drew only P31.9 billion in bids from banks for the P40 billion that the BSP offered, repeating last week’s undersubscribed situation. The central bank accepted all P31.9 billion in bids, with the yield rising to 3.8689 percent from last Wednesday’s 3.7342 percent.
