Post-Christmas holiday liquidity drives TDF demand; rates down

Sustained high domestic liquidity situation in the country, especially after the Christmas holidays, continues to drive demand for the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF), rates of which declined on Wednesday.

Data released by the central bank showed higher offerings for both the seven-day and 14-day TDF this week at PHP180 billion and PHP250 billion, respectively.

These are PHP10 billion and PHP20 billion higher than the offer volume for the one-week and two-week tenor, respectively, during the last auction on Dec. 29, 2021.

The auction committee made full awards for both tenors.

Tenders for the one-week facility reached PHP280.34 billion, resulting in a bid coverage ratio of 1.5575.

The average rate of this tenor declined to 1.7371 percent from 1.7428 percent in the previous auction.

Total bids for the two-week TDF amounted to PHP451.889 billion, bringing the bid coverage ratio to 1.8076.

This tenor’s average rate slipped to 1.7760 percent from 1.8011 percent previously.

In a statement, BSP Deputy Governor Francisco Dakila Jr. said results of the TDF auction this week “are in line with the expectation of normalization in cash demand as excess liquidity in the financial system gradually returns to the BSP’s deposit facilities.”

“The higher demand for the longer tenor further supports the view that financial system liquidity is very ample. Looking ahead, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments,” he added.

Source: Philippines News Agency

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