Risk-averse banks continue to park excess cash in BSP’s vault
Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)
In a statement, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco Dakila Jr. said regulators made a full award of P110 billion for its 28-day debt instrument, marking an increase from the previous week’s P100-billion tender due to “ good demand from market participants.”
“The results of the BSP bill auction remains in line with the BSP’s view that market conditions remain normal and financial system liquidity continues to be ample,” he said.
The weighted average interest rate increased marginally by 0.074 basis points to 1.7746 percent. Meanwhile, the accepted yields shifted slightly lower but remained in the narrow range of 1.753 to 1.790 percent.
The auction was oversubscribed by 1.23 times the offered volume, receiving bids amounting to P135.1 billion.
Earlier in the week, banks also exhibited strong demand for the central bank’s 7- and 14-day term deposit facilities (TDFs).
The BSP adjusted downward its TDF offer volume to P510 billion from the previous week’s P520-billion offering, and distributed between the 7-day and 14-day tenors at P150 billion (maintained from the previous week) and P360 billion (up from from P370 billion), respectively.
Both tenors were oversubscribed with the 7-day and 14-day TDF receiving bids 1.12 times and 1.13 times their respective offer volumes. Total tenders amounted to P575.92 billion.
Dakila noted that the weighted average interest rate for the 7-day TDF continued to decline from last week’s rate, settling 0.223-basis point lower at 1.7230 percent. Meanwhile, the 14-day rate rose by 1.541 bps to 1.7546 percent.
Accepted yields for the 7-day TDF remained low but moved to a narrower range of 1.7-1.735 percent while that for the 14-day TDF shifted higher and moved to a range of 1.7-1.830 percent.
“The slight uptick in the 14-day rate may have been influenced by the results of last week’s auction,” he said. “Nevertheless, market conditions remain normal amid sustained ample liquidity in the financial system.”
“Moving forward, the BSP’s monetary operations will continue to be guided by its latest assessment of prevailing liquidity conditions and market developments,” the central bank’s deputy chief said.
