YIELDS ON term deposits offered by the Bangko Sentral ng Pilipinas (BSP) on Wednesday slipped on expectations of faster inflation in November.
Total bids for the central bank’s term deposit facility (TDF) amounted to P608.416 billion on Wednesday, surpassing the P480 billion up for grabs but lower than the P602.03 billion in demand seen in the previous week.
Broken down, tenders for the seven-day deposits reached P208.985 billion, above P180 billion up for grabs as well as the P193.53 billion in bids logged in last week’s auction.
Accepted rates fell within 1.615% to 1.78%, a lower range compared with the 1.62% to 1.8% band seen on Nov. 25. This caused the average rate of the one-week papers to settle at 1.7292%, inching down by 1.87 basis points (bps) from the 1.7479% recorded a week ago.
For the 14-day term deposits, demand totaled P399.431 billion, higher than the P300 billion auctioned off yesterday but failing to beat the P408.5 billion in bids seen in the previous auction, which was for a P290-billion offering.
Banks asked for yields ranging from 1.625% to 1.7625%, declining from the 1.64% to 1.7925% margin seen a week ago. With this, the two-week paper’s average rate stood at 1.7261%, slipping by 0.65 bp from the 1.7326% seen in the previous week’s auction.
The central bank did not offer the 28-day term deposits for the eighth straight week. This follows the start of the central bank’s weekly auctions of its own bills with the same tenor.
Both the TDF and the BSP’s securities are part of tools used by the central bank to mop up excess liquidity in the financial system and to better guide market interest rates.
“The TDF auction results indicate increased preference among market participants for the shorter tenor, possible in view of the holiday season,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.
The slightly lower TDF yields came ahead of the November inflation data which is expected to be quicker than the preceding month’s print, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
The headline inflation rate in November likely quickened as a recent spate of typhoons pushed the prices of food and agricultural products higher, economists said.
A BusinessWorld poll of 13 analysts conducted last week yielded a median estimate of 2.7%, near the low end of the 2.4-3.2% forecast range of the BSP and well within the 2-4% target for the year.
If realized, the median estimate will be faster than the 2.5% logged in October and the 1.3% seen in November 2019.
The central bank expects inflation to average 2.4% this year. The consumer price index rose 2.5% as of October year to date.
The Philippine Statistics Authority will report November inflation data on Friday, Dec. 4. — L.W.T. Noble