BSP exec: Domestic liquidity remains enough for PHL’s requirements

A ranking official of the Bangko Sentral ng Pilipinas (BSP) on Wednesday assured that domestic liquidity remains high despite the decline in tenders on the central bank’s longer-tenor term deposit facility (TDF). (Photo: Bangko Sentral ng Pilipinas/ Facebook)

MANILA—A ranking official of the Bangko Sentral ng Pilipinas (BSP) on Wednesday assured that domestic liquidity remains high despite the decline in tenders on the central bank’s longer-tenor term deposit facility (TDF).

During Wednesday’s TDF auction, bids for the 28-day TDF reached PHP140.76 billion, lower than the PHP150 billion offering and last week’s PHP176.89 billion.

This resulted in a drop in this tenor’s bid coverage ratio to 0.9384 from 1.1793 last March 15.

On the other hand, bids for the seven-day facility reached PHP39.18 billion, higher than the PHP30 billion offering but lower than last week’s PHP41.13 billion tenders.

BSP Deputy Governor Diwa Guinigundo traced the preference for the shorter-dated TDF to the market’s “positioning for any opportunistic short-term proposition”.

“This is the reason why, despite the increase in bid to coverage ratio for the seven-day TDF, weighted interest rate stood at a higher level of 2.52 percent,” he said in a text message.

This week, the weighted average accepted yield stood between 2.9873 percent for the seven-day facility and 3.3028 percent for the 28-day TDF.

Guinigundo pointed out that if banks feel the need to increase their liquidity positions to cater to their clients’ needs, they can easily pull out their placements with the central bank.

”Should there be actual liquidity tightening, all that the banks have to do is to withdraw from the liquidity facilities of the BSP to fund loans, investments, foreign exchange purchases and even public spending on power and infrastructure,” he added.