TDF rates lower this week

The two-tenor term deposit facility (TDF) of the central bank have lower yields this week ahead of Thursday’s Monetary Board policy meeting.

Bid volume in the meantime, amounted to 138.54 billion and more than the offer of 130 billion, with both the 7-day and 14-day TDF oversubscribed, based on Bangko Sentral ng Pilipinas (BSP) data.

The 7-day tenor, offered at 120 billion, attracted bids of 120.53 billion. The offer is bigger this week compared to May 2’s 110 billion. The average rate fell to 4.6925 percent from the previous week’s 4.7198 percent.

The 14-day, offered at 110 billion which was the same volume last week, had tenders amounting to 118 billion. This was more than the previous week’s tenders of 115.52 billion. The TDF’s average rate slipped to 4.6961 percent from 4.7524 percent.

Market observers have mixed sentiments on whether or not the BSP may opt to keep steady rates this week when the Monetary Board decides on policy stance.

BSP Governor Benjamin E. Diokno has said that timing both policy rate and banks’ reserve ratio adjustments will need careful review. He said resuming reductions in reserve requirement ratio (RRR) will have to be timed well with the BSP’s tweaking of its auction-based open market operations (OMO).

Diokno has reiterated one of his earlier pronouncements that he will be reducing RRR from 18 percent to single-digit level before his term ends in 2023.

Within days of his appointment last March 4, Diokno said he wants to accelerate the RRR reduction and bring it to single-digit level even before the end of his term. He has also announced previously that the BSP may cut RRR by one percentage point at least, for the next four quarters.