MANILA -- Mixed results once again were registered by the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) Wednesday despite the oversubscription for both tenors.
Data released by the BSP showed that rate of the seven-day facility declined to 4.6278 percent from 4.6661 percent during the auction last June 13.
It was offered for PHP10 billion while tenders were more than twofold at PHP20.259 billion. The auction committee made a full award.
Bid coverage ratio increased to 2.0259, up from the previous week’s 1.0770.
Rate of the 14-day facility rose to 4.7107 percent from 4.6562 percent
The auction committee made a full award of PHP10 billion while tenders reached PHP20.585 billion.
Bid coverage ratio also improved to 2.0585 from the previous week’s 0.7418.
The BSP did not offer the 28-day facility this week.
On Tuesday, BSP Governor Benjamin Diokno said bids submitted for the TDF will not always be higher than the offer volume despite the additional liquidity in the system vis-à-vis the cut in banks’ reserve requirement ratio (RRR).
“That is not the measure of liquidity. It means they are putting money elsewhere. Maybe they are investing it in stocks or they are really lending it,” he said.
RRR for rural banks (RBs) and cooperative banks’ (Coop banks) demand deposits and negotiable order of withdrawal (NOW) accounts were slashed by 100 basis points effective May 31, 2019.
RRR of universal and commercial banks (U/KBs), thrift banks (TBs), and non-bank financial institutions with quasi-banking functions (NBQBs) were slashed by 100 basis points effective May 31 and will be slashed further by 50 basis points each on June 28 and July 26.
The reduction in RRR is expected to release at least PHP180 billion worth of liquidity into the economy. (PNA)
