NextGen Day

On Wednesday, the term deposit facility (TDF) rates of the Bangko Sentral ng Pilipinas (BSP) increased once more, with investors continuing to choose the short term.

During the auction on August 10 of last year, the seven-day TDF’s average rate increased to 3.6913 percent from 3.5623 percent.

Additionally, the rate for the 14-day facility jumped from 3.6762 percent last week to 3.7019 percent this week.

The BSP reduced the offer volume for the seven-day TDF from last week’s PHP180 billion to PHP170 billion. After bids reached PHP204.946 billion, this was totally awarded.

The offer volume for the 14-day facility was reduced from PHP170 billion last week to PHP120 billion. After receiving only PHP85.868 billion in bids, this was undersubscribed. The PHP69.273 billion was accepted by the auction committee.

The TDF auction results “show market participants’ continued preference for the shorter tenor given anticipation of another rate hike by the BSP and the issue of Retail Treasury Bonds,” according to a statement from BSP Deputy Governor Francisco Dakila Jr.

As long as inflation continues to rise, the Monetary Board (MB), which sets BSP’s policy, is likely to announce another increase in the key interest rates at its meeting on Thursday.

Additionally, Dakila noted that banks’ increased loan disbursements indicate that there is less spare cash available for placement in the BSP’s deposit facilities.

He continued, “Monetary operations will continue to be guided by the central bank’s assessment of the most recent liquidity conditions and market developments.”

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