Connect with us

Hi, what are you looking for?

Economy

Yields on term deposits decline sharply on surprise easing move

YIELDS on the central bank’s term deposits dropped after last week’s rate decision. — BW FILE PHOTO

YIELDS ON term deposits offered by the Bangko Sentral ng Pilipinas (BSP) dropped on Wednesday following the central bank’s surprise rate cut last week.

Demand for the central bank’s term deposit facility (TDF) reached P602.03 billion on Wednesday, surpassing the P460 billion up for grabs but lower than the P645.585 billion in tenders logged in last week’s auction.

Broken down, the one-week deposits attracted bids amounting to P193.53 billion, going beyond the P170 billion on the auction block but failing to beat the P230.855 billion in tenders recorded last week.

Lenders asked for yields ranging from 1.62% to 1.8%, a lower band than the 1.945% to 2.0095% margin logged a week ago. With this, the tenor’s average rate stood at 1.7479%, dropping by 23.34 basis points (bps) from the 1.9813% logged on Nov. 18.

Meanwhile, tenders for the 14-day papers hit P408.5 billion, higher than the P290-billion offering but also below the P414.73 billion in bids seen a week ago for the P190 billion auctioned off by the BSP.

Accepted rates ranged from 1.64% to 1.7925%, declining from the 1.9% to 2.0455% band logged the previous Wednesday. With this, the two-week paper’s average rate settled at 1.7326%, lower by 26.58 bps from the 1.9984% seen a week ago.

The central bank did not offer the 28-day term deposits for the seventh consecutive week. This follows the start of the central bank’s weekly auctions of its own bills with the same tenor.

The TDF and the BSP’s securities are among the central bank’s main tools to gather excess liquidity in the financial system and to better guide market interest rates.

Term deposit yields declined sharply this week due to the surprise rate cut fired off by the BSP, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said on Wednesday.

The BSP unexpectedly cut benchmark rates to new record lows last week, the fifth reduction this year, citing the continued uncertainty caused by a fresh surge in coronavirus cases globally and the impact of recent typhoons on the struggling economy.

The Monetary Board on Thursday trimmed the rates on the BSP’s overnight reverse repurchase, lending, and deposit facilities by 25 bps to 2%, 2.5%, and 1.5%, respectively.

The latest easing move followed a “prudent pause” by the central bank since its June meeting. The central bank has already cumulatively lowered interest rates by 200 bps this year.

A BusinessWorld poll showed five out of 16 analysts expected the BSP to cut rates by 25 bps.

The central bank upgraded its inflation forecast this year to 2.4% from the 2.3% it gave in the October meeting.

On the other hand, the inflation outlook for 2021 and 2022 were lowered to 2.7% (from 2.8%) and 2.9% (from 3%), respectively, due to the slower-than-expected pickup in domestic activity, the decline in global crude oil prices, and the strengthening of the peso.

Philippine gross domestic product declined by 11.5% in the third quarter, slightly better than the record 16.9% contraction seen in the April to June period. — LWTN

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Economy

PHILIPPINE SHARES may move sideways this week amid an expected rate hike by the Bangko Sentral ng Pilipinas (BSP) at its Aug. 18 meeting...

Economy

THE PESO may strengthen this week on expectations that the central bank will raise benchmark rates anew at its meeting on Thursday.  The local...

Economy

THE Philippine Economic Zone Authority (PEZA) said it considers a downgraded investment growth target for 2022 of 6-7% to be within reach after investment...

Economy

NORWAY’s ambassador said the Philippines is a potential destination for Norwegian businesses, but their interest in renewable projects here will depend on the industry’s...

Economy

THE government’s chief economic planner said the Philippines must minimize its exposure in case the geopolitical situation deteriorates, with analysts citing the potential of...

Economy

THE new president of the Bases Conversion and Development Authority (BCDA) is a career official in the agency and the first woman to head...

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Economy

Ivermectin, an existing drug against parasites including head lice, has had a checkered history when it comes to treating COVID-19. The bulk of studies...

Investing

Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered throughout...

Investing

Instagram still holds the top spot for social media in terms of building brand reputation and expanding business potential. Every day, more and more...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.