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BSP fully awards offer of short-term securities

THE BANGKO SENTRAL ng Pilipinas (BSP) fully awarded its offering of short-term securities on Friday as rates inched down after slower-than-expected inflation in June and amid a decline in yields on US benchmark notes. 

The central bank awarded P100 billion as planned in 28-day bills as demand reached P182.21 billion, surpassing the P158.2 billion in bids logged the previous week. 

Accepted rates for the bills ranged from 1.795% to 1.8086%, a narrower margin compared to the 1.78% to 1.8245% band seen in the previous week’s auction. This caused the average rate of the one-month securities to slip by 0.93 basis point (bp) to 1.8022% from 1.8115% previously. 

The BSP bills and the term deposit facility are used by the central bank to gather excess liquidity in the financial system and guide market rates. 

The lower yields fetched for the BSP bills on Friday came after the release of data showing inflation eased in June, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message. 

Headline inflation slowed to a six-month low last month on the back of easing transport prices. 

Data from the Philippine Statistics Authority showed the consumer price index rose by 4.1% in June. This was slower than the 4.5% print in May but marked the sixth consecutive month of inflation falling beyond the BSP’s 2-4% target for 2021. 

Inflation in the first six months of the year averaged 4.4%, above the central bank’s 4% forecast. 

Mr. Ricafort said the market also took its cue from benchmark US bonds. The rates of US Treasuries dropped by as much as 7 bps across the curve, with the 10-year note’s yield slipping to 1.25% before bouncing back above 1.29%, Reuters reported. — L.W.T. Noble with Reuters 

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