TDF yields inch up before BSP meeting
YIELDS on the term deposits auctioned off by the Bangko Sentral ng Pilipinas (BSP) inched higher on Wednesday ahead of its policy meeting on Thursday.
Demand for papers under the BSP’s term deposit facility (TDF) totaled P319.002 billion on Wednesday, higher than the P300 billion on the auction block and the P297.282 billion in bids logged last week.
Broken down, the seven-day deposits attracted tenders amounting to P179.011 billion, higher than the P170-billion offering as well as the P167.147 billion in bids recorded the prior week for a P160-billion offer.
Rates for the one-week papers ranged from 6.57% to 6.61%, unchanged from the previous week. This brought the average rate for the tenor to 6.5956%, inching up by 0.24 basis point (bp) from the 6.5932% seen on Aug. 9.
For the 14-day deposits, tenders hit P139.991 billion, going above the P130-billion offering and the P30.135 billion in bids last week for the P140 billion on the auction block.
Accepted yields were from 6.55% to 6.52%, steady from the previous week. This brought the average rate of the two-week deposits to 6.5998%, up by 0.24 bp from the 6.5974% logged a week ago.
The central bank has not auctioned off 28-day term deposits for more than two years to give way to its weekly offering of securities with the same tenor.
The term deposits and the 28-day bills are used by the BSP to mop up excess liquidity in the financial system and to better guide market rates.
TDF yields were higher on Wednesday amid expectations of a 25-bp rate hike from the BSP this week, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
According to Mr. Ricafort, there is a good chance the BSP will resume its policy tightening to mirror the latest move of the US Federal Reserve and help stabilize the peso.
A BusinessWorld poll last week showed 13 of 15 analysts predict the Monetary Board will extend its pause at its Aug. 17 meeting.
On the other hand, two economists expect the BSP to hike borrowing costs by 25 bps to match the move of the US Federal Reserve last month. If realized, this would bring the key rate to 6.5%.
The Monetary Board has raised policy rates by 425 bps from May 2022 to March 2022. Meanwhile, the US Federal Reserve raised the federal funds rate target by 25 bps to 5.25-5.5%, the highest level in more than two decades.
On Wednesday, the local currency closed at P56.515 per dollar, appreciating by 32.50 centavos from its previous finish of P56.84 against the greenback. Year to date, the peso has depreciated by 1.3% or 76 centavos from its P55.755 close on Dec. 29.
After Thursday’s review, the BSP’s other policy-setting meetings for the year will be held on Sept. 21, Nov. 16, and Dec. 14. — Keisha B. Ta-asan
