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Philippines: Term deposit rates climb
MANILA, Philippines — Term deposit rates rose across-the-board to hit record levels ahead of the rate-setting meeting of the Bangko Sentral ng Pilipinas (BSP) scheduled today.
The seven-day term deposits fetched a record yield of 4.8291 percent, 8.49 basis points higher than last week’s 4.7442 percent, while the rate of the 14-day tenor increased 7.52 basis points to a record 4.8642 percent from 4.7890 percent.
Likewise, the yield of the 28-day term deposits hit a record level of 4.9162 percent yesterday, 1.52 basis points higher than the 4.9010 percent recorded last week.
The term deposit auction facility (TDF) was undersubscribed yesterday as total bids tendered by banks amounted to only P65.63 billion versus the reduced volume of P90 billion.
Tenders for the P50 billion seven-day term deposits amounted only to P35.41 billion, while bids for the P20-billion 14-day tenor was slightly undersubscribed at P19.32 billion.
On the other hand, the 28-day tenor was undersubscribed as bids amounted to P10.9 billion versus the revised P20 billion volume.
BSP Deputy Governor Diwa Guinigundo said banks continue to have greater uses for lending, investments and foreign exchange purchases.
“Volume appears higher than actual liquidity that is now available in the market. As a result, TDF rates climbed higher. It’s a normal market development,” Guinigundo said.
The TDF was launched in June 2016 as part of the shift to the interest rate corridor (IRC) framework to guide short-term market rates towards he BSP policy interest rate. It also serves as a liquidity absorption facility of the central bank.
The BSP’s Monetary Board is scheduled to hold its second to the last rate-setting meetings for 2018 today.
The central bank is anticipated to raise interest rates by another 25 basis points today to keep inflation expectations well anchored.
The BSP has so far raised interest rates by 150 basis points in four consecutive rate-setting meetings since May to curb rising inflationary pressures.
Inflation averaged 5.1 percent in the first 10 months, exceeding the BSP’s two to four percent target. The consumer price index was steady at 6.7 percent in October.
Source: https://www.philstar.com/business/2018/11/15/1868605/term-deposit-rates-climb#5l0O0Z923ok0qvLJ.99