By Lee C. Chipongian

Yield of the central bank’s term deposit facility (TDF) was down this week but bids exceeded the P50-billion offer across all tenors.

centralbank with logo 2 - TDF rates fell on high volume tenders

MB file photo.

Based on Bangko Sentral ng Pilipinas (BSP) data, total tenders amounted to P93.39 billion. The auction volume is P10 billion higher than September 4’s P40 billion.

During Wednesday’s auction the 7-day tenor offered at P10 billion, attracted bids of P23.70 billion, lower than the previous week’s P24.90 billion. The average rate dropped to 4.3486 percent from 4.4141 percent in the last auction.

The 14-day TDF, offered at P20 billion which was higher than last week’s P10 billion, had tenders of P34.45 billion. This was more than September 4’s P22.98 billion. Yields fell to 4.3995 percent from 4.4352 percent.

The 28-day TDF had P35.24-billion tenders versus offer of P20 billion. This was also higher than the previous week’s P28.17 billion. Average rate for the tenor was down to 4.4907 percent from 4.4950 percent last week.

The market expects the BSP to reduce key rates by another 25 basis points (bps) this month after BSP Governor Benjamin E. Diokno said a rate action will be decided on by the end of the year. The next Monetary Board policy meeting is on September 26. It will have two more after, on November 26 and December 12, for a total of eight policy meetings for 2019.

Diokno has said that they will do another policy rate cut and also another reduction in banks’ reserve requirement ratio in the last months of the year. He said that both actions are “live issues” and could come at any time.

Diokno said they will again reduce the RRR this year, on top of the 200 bps RRR cut they implemented in tranches in May, June and July. He, however, said that it may not be as much as another 200 bps cut, equivalent to P190 billion in fresh liquidity.

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