YIELDS on the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) continued to rise on Tuesday due to expectations of more rate hikes next month.
Total bids for the central bank’s term deposits reached P233.469 billion, below the P330-billion offer for this week as well as the P278.916 billion in tenders seen last week for a P360-billion offer.
Broken down, the eight-day papers fetched bids amounting to P111.737 billion, lower than the P180 billion auctioned off by the BSP, central bank data showed. This was also below the P142.235 billion in tenders logged in the previous auction, where the BSP offered P200 billion. Accepted rates for the papers were from 5.6% to 6.175%, also higher than the 5.15% to 6% range seen on Nov. 23. With this, the average rate of the two-week deposit increased by 20.27 bps to 5.8662% from 5.6635% in the previous week’s auction.
“The results of the TDF auction continue to reflect the pass-through of the recent BSP policy rate hike. In addition, the undersubscriptions could be attributed to eligible counterparties’ increased preference for cash in preparation for the holidays,” Mr. Dakila said. October inflation rose to 7.7%. For the first 10 months, inflation averaged 5.4%, higher than the BSP’s 2-4% target but below its 5.8% forecast for the year.
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