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Philippines: Term deposit rates continue to decline
MANILA, Philippines — Term deposit rates continued to ease further amid the liquid environment in the country, according to the Bangko Sentral ng Pilipinas.
BSP Deputy Governor Francisco Dakila Jr. said the yield of the seven-day term deposits slipped by 0.626 basis point to 1.6157 percent at the term deposit facility (TDF) yesterday from last week’s 1.622 percent.
Likewise, Dakila said the 14-day term deposits fetched 1.6256 percent, 1.444 basis points lower than the previous yield of 1.64 percent.
He said the range of accepted yields remained low for both tenors, but were wider for the seven-day at 1.59 to 1.75 percent and narrower for the 14-day, at 1.6 to 1.638 percent.
Bids for the seven-day tenor amounted to P210.61 billion, lower than the increased P240 billion offering, while tenders for the 14-day term deposits reached P451.26 billion, exceeding the higher volume of P390 billion.
“The slight undersubscription in the seven-day tenor reflects market participants’ increased preference for longer maturities in order to seek higher yields amid a very liquid environment,” Dakila said.
Total tenders for both tenors amounted to P630 billion against the increased volume of P610 billion.
“Looking ahead, the BSP will remain guided by its assessment of liquidity conditions and market developments in the conduct of its monetary operations,” Dakila said.
To cushion the impact of the COVID-19 pandemic on the economy, the BSP emerged as one of the most aggressive central banks in the world slashing interest rates by 200 basis points to an all-time low of two percent and lowered the reserve requirements for banks.
Other measures include the P300 billion repurchase agreement with the Bureau of the Treasury settled last September, the P540 billion provisional advance to the national government paid last December, another P540 billion non-interest bearing loan to the national government, and the purchase of government securities in the secondary market.
In all, these measures helped unleash P2 trillion in additional liquidity into the financial system to help the economy recover from a pandemic-induced recession last year.
Latest data from the BSP showed domestic liquidity or M3 grew at a slower pace of 9.5 percent to P14.2 trillion in end- December from a growth of 10.5 percent in November.
Source: https://www.philstar.com/business/2021/02/04/2075142/term-deposit-rates-continue-decline