Caution over US Fed hits TDF auction


Market cautiousness over possible interest rate hikes in the US hit the bids under the term deposit facility (TDF) of the central bank.

Out of the P180-billion offer, the Bangko Sentral ng Pilipinas (BSP) awarded about P167 billion in Wednesday’s auction.

Bids for the seven-day tenor were oversubscribed at P53.30 billion, prompting the BSP to fully award the P40-billion offer.

But the 28-day TDF was undersubscribed anew, attracting only P127.03 billion. The BSP awarded only P127.03 billion against the weekly offer of P140 billion.

“There’s still a lot of uncertainty in the market, uncertainty in the sense that anytime the US Fed can choose to do a third or even a fourth adjustment in the policy rate,” said BSP Deputy Governor Diwa Guinigundo.

“And if you are holding a longer term instrument you’ll be locked in to that instrument. So the market basically prefers to go short term instead of going into 28 days. I think they have more flexibility,” he explained.

The interest rate for the seven-day facility declined to 3.2468 percent from 3.2756 percent, while the 28-day tenor rose to 3.4764 percent from 3.4610 percent.


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