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.