November 5, 2021

Rates on term deposit facilities are falling due to high demand.

Due to the high liquidity position in the economy, the rates of the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility fell on Wednesday due to robust demand.

The average rate of the seven-day TDF, which is one of the central bank’s surplus liquidity mopping tools, has risen to 1.7430 percent, according to central bank data, while the 14-day facility has risen to 1.7696 percent.

During the auction on October 27, these were 1.7521 percent for the one-week facility and 1.7723 percent for the two-week facility.

This week, the BSP increased the offer volume for both tenors by PHP10 billion, bringing it to PHP170 billion for the one-week facility and PHP330 billion for the two-week facility. Both were oversubscribed and awarded in full.

The bid coverage ratio for the seven-day facility was 1.4563, with tenders totaling PHP247.573 billion.

The bid coverage ratio for the 14-day TDF was 1.1946, with bids totaling PHP394.209 billion.

The oversubscription in most of the TDF’s weekly auctions has been attributed by BSP Deputy Governor Francisco Dakila Jr. to abundant liquidity in the domestic economy.

“In the future, the BSP’s monetary operations will be guided by its evaluation of the most recent liquidity conditions and market developments,” he said.

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