MANILA, Philippines -- Debt yields are expected to keep to a tight range but drift lower this week as investors welcomed the central bank's decision to cut banks' reserve requirements to inject liquidity into the financial system.

Yields were likely to be boxed in a 5-10 basis point range for the rest of the week after falling 20 basis points on Friday when the Bangko Sentral ng Pilipinas, the country's central bank, cut banks' regular reserve requirements by 2 percentage points, traders said.

It was the first time the central bank had tweaked banks' reserve requirements since July 2005.

"It seems the central bank is being pro-active in dealing with liquidity pressures," said a trader from a local bank. "The cut in banks' reserve requirements favors the market."

The central bank move, which takes effect on Nov. 14, would release about P60 billion into the banking system, analysts said.

"The market right now will be consolidating and they will assess whether yields can still go lower as we move toward next week when we will see the full effects of the cut in reserve requirements," another trader from a local bank said.

The monetary authority's action follows similar moves in Asia in recent weeks by China, India, Taiwan and Vietnam to shield their economies from the world's worst financial crisis in decades.

Some economists said the move may allow the central bank to keep interest rates steady at its policy-setting meeting on Nov. 20 since inflation remained at double-digit levels, even if it appeared to have peaked.

The government will sell P5.0 billion worth of 182-day and 364-day Treasury bills at an auction on Monday at 0500 GMT.

Traders expect the six-month and one-year paper to fetch an average rate of 6.5-6.75 percent and 7-7.25 percent, respectively, at the auction, levels that are near the yields quoted in the secondary market.