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Philippines: Term deposit rates rise
MANILA, Philippines — Term deposit rates increased on strong demand from cash-rich banks as the Bangko Sentral ng Pilipinas (BSP) continued to suspend the offering of the 28-day tenor.
BSP Deputy Governor Francisco Dakila Jr. said the yield of the seven-day tenor went up by 3.47 basis points to 1.8813 percent at the Term Deposit Facility (TDF) auction yesterday from 1.8466 percent percent last week.
Likewise, the 14-day term deposits fetched 1.9051 percent yesterday, 6.25 basis points higher than last week’s 1.8426 percent.
Dakila said there was no volume offered in the 28-day term deposits for the second straight week. The central bank has doubled the volume of the 28-day BSP securities to be auctioned tomorrow to P120 billion from last week’s P60 billion.
Tenders for both tenors amounted to P518.88 billion, higher than the increased volume of P490 billion.
Bids for the seven-day tenor reached P225.95 billion versus the increased volume of P220 billion, while tenders for the 14-day term deposits amounted to P292.92 billion versus the higher offering of P270 billion.
“The results of the TDF auction continue to show that liquidity in the financial system is ample,” Dakila said.
Looking ahead, Dakila said the BSP’s monetary operations would remain guided by its assessment of market developments and liquidity conditions.
Michael Ricafort, chief economist at Yuchengco-led Rizal Commercial Banking Corp., said the higher term deposit offerings and full awards reflect the increased mopping up activity in the financial system even with the phasing out of the 28-day tenors.
“Higher TDF auction offering amounts in recent weeks to mop up more excess liquidity from the financial system as a pre-emptive measure to better manage the impact on inflation if the economy recovers further,” Ricafort said.
Ricafort attributed the rise in term deposit rates to higher US Treasury yields, which hit a new four-month high amid optimism in possible stimulus that could entail more borrowings by the US government and more supply of bonds.
Source: https://www.philstar.com/business/2020/10/22/2051300/term-deposit-rates-rise