THE BANGKO SENTRAL ng Pilipinas (BSP) fully awarded its offer of short-term securities on Friday at a slightly higher average rate due to the rise in global oil prices amid a recovery in demand. 

The BSP awarded the programmed P100 billion in BSP bills on Friday as bids for the 28-day securities hit P162.69 billion, more than the P105.41 billion logged last week. 

Accepted rates for the papers ranged from 1.755% to 1.87%, a narrower band compared to the 1.75% to 1.973% band logged last week. With this, the average rate for the one-month securities rose by 1.08 basis points (bp) to 1.7965% from 1.7857% in the previous auction. 

The short-term bills and the term deposits are used by the central bank to gather excess liquidity in the financial system and guide interest rates. 

The higher average rate fetched for the BSP bills on Friday came after the uptick in global oil prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message. 

Oil prices soared to their highest in two years on Thursday as the market was optimistic on a continued recovery in demand, Reuters reported. 

Brent futures rose 0.4% to $72.52 a barrel on Thursday while the US West Texas Intermediate (WTI) increased 0.5% to $70.29. Those were the highest closes for Brent since May 2019 and WTI since October 2018. 

“Recent gains in the local stock market also partly led to the pickup in some short-term interest rates, as some investors seek higher returns in the local equity markets,” Mr. Ricafort added. 

The Philippine Stock Exchange index gained 32.08 points or 0.47% to end at 6,907.79 on Friday.  

Yields on the BSP’s term deposits also increased at this week’s offering. The average rate for the seven-day papers rose by 3.82 bps to 1.7582%, while the 14-day papers were quoted at 1.795%, up by 0.09 bp from the previous auction. — LWTN