The central bank’s term deposit facility (TDF) attracted P281.954 billion worth of tenders on Wednesday, Jan. 24, lower than the offer of P340 billion.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said there was low demand for the TDF tenors this week.
Of the P340 billion, the BSP allocated P180 billion for the 7-day TDF and P160 billion for the 14-day tenor. Both are lower compared to the previous week’s P185 billion and P175 billion, respectively.
Dakila said the total bids of P281.954 billion “was lower than the BSP’s expected volume range."
“Respective bid-to-cover ratios for the 7-day and 14-day tenors settled at 0.758 and 0.909, underscoring low demand as market participants tended to client requirements and adjusted their asset positions,” he said.
Meanwhile, the BSP awarded P136.38 billion for the 7-day tenor, slightly lower than the previous week’s P136.488 billion. The 14-day tenor accepted P145.466 billion.
This week’s weighted average interest rate (WAIR) for the 7-day TDF dropped by 0.09 basis point (bp) to 6.5847 percent. The WAIR for the 14-day tenor also dipped by 0.03 bp to 6.6187 percent.
“The range of yields accepted in the 7-day and 14-day tenors remained relatively unchanged at 6.5600-6.6295 percent and 6.6000-6.6499 percent, respectively,” noted Dakila.
The BSP’s TDF is an interest rate corridor facility to bring the market rates closer to the BSP key rate. Basically, the TDF absorbs excess money in the financial system to control inflationary pressures.
The BSP’s policy-making arm, the Monetary Board, has maintained the target reverse repurchase rate steady at 6.5 percent.