YIELDS on the central bank’s term deposits slipped on Wednesday, as demand inched higher due to ample liquidity and amid concerns on the impact of the Omicron variant.

Demand for the term deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) reached P534.487 billion on Wednesday, the last offering for 2021. This surpassed the P400-billion auctioned off by the central bank as well as the P508.198 billion in bids seen last week.

Broken down, bids for the one-week term deposits amounted to P196.26 billion, well above the P170-billion offering and below the P202.415 billion in tenders logged the previous Wednesday.

Accepted rates were from 1.72% to 1.78%, wider than the 1.725% to 1.7675% seen a week ago. This brought the average rate of the seven-day papers to 1.7428%, dipping by 0.67 basis point (bp) from the 1.7495% quoted previously.

Meanwhile, the 14-day papers fetched bids amounting to P338.227 billion, higher than the P230-billion offer as well as the P305.783 billion recorded on Dec. 22.

Lenders sought for yields ranging from 1.765% to 1.83%, tighter than the 1.76% to 1.88% band logged a week earlier. With this, the average rate of the two-week deposits declined by 2.95 bps to 1.8011% from 1.8306% in the prior auction.

The BSP has not auctioned 28-day term deposits for more than a year to give way to its weekly offering of bills with the same tenor.

“The auction results continue to show strong interest from market participants for the BSP’s deposit facility amid sustained ample liquidity in the financial system,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said yields were lower as investors worry over the impact of the newest variant of the coronavirus disease 2019 (COVID-19).

“Concerns over the Omicron variant and the increase in COVID-19 cases in some countries could lead to some restrictions and could slow down global economic recovery and could also potentially ease demand/inflation,” Mr. Ricafort said in a Viber message.

In the Philippines, the infection rate has edged higher in the previous days. Cases rose by 421 on Tuesday to bring the total to 9,750, based on data from the Department of Health. Authorities have warned that cases in Metro Manila have been increasing over the holidays.

The Philippines has already detected four cases of the Omicron variant as of Tuesday.

The US and countries in Europe, as well as Australia, and China, among others, are also seeing cases spike in recent weeks.

The central bank on Wednesday said it expects inflation to range between 3.5% and 4.2% in December. BSP Governor Benjamin E. Diokno said lower oil prices could cause inflation to ease, although Typhoon Odette caused higher food prices.

In November, inflation stood at 4.2%, easing from the 4.6% in October but still above the BSP’s 2-4% target. Inflation year to date was at 4.5%, which is still above the central bank’s 4.4% forecast for 2021. — Luz Wendy T. Noble