THE central bank will increase the weekly volume of the term deposit facility (TDF) to P180 billion from P130 billion to siphon off liquidity overflowing from its overnight deposit facility (ODF).
The Bangko Sentral ng Pilipinas (BSP) is raising the weekly TDF offer at P150 billion from P120 billion for the 28-dayfacility on December 1. The volume for the seven-day tenor will also be raised to P30 billion from P10 billion.
“We raised the auction size for both facilities for the December auctions as there is still a significant amount of liquidity flowing into our ODF,” BSP Governor Amando Tetangco Jr. said in a text message.
Capturing more liquidity under the longer tenors would help monetary authorities better manage the amount of excess funds in the financial system, the central bank official said.
The BSP adopted the interest rate corridor on June 3, to lure short-term market rates toward the BSP’s policy rate or the overnight reverse repurchase (RRP) rate.
During the auction Wednesday, the central bank awarded P130 billion that included P120 billion of 28-day TDF and P10 billion of seven-day TDF. It rejected most of the more than P230 billion of tenders.
The auction results showed that the BSP facilities remain effective at mopping up excess liquidity in the system, Tetangco said.
The total tenders amounted to P29.59 billion for the seven-day term deposit, while tenders for the 28-day facility dropped to P207.3 billion.
“We noted a decline in the tender amount in the 28-day from about P232 billion last week to about P207 billion this week. This may be due to market positioning ahead of seasonal requirements given the maturity of the 28-day is mid-December already,” the BSP chief said.
The seven-day TDF was priced higher at 2.52 percent and the 28-day tenor rose at 2.78 percent, “in line with price movements in the recent past auctions,” Tetangco said.