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TDF rates drop further

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YIELDS ON the seven-day deposits inched down. — BW FILE PHOTO

YIELDS ON the central bank’s term deposit facility (TDF) inched down after a slight uptick in the prices of commodities like oil and rice.

Total bids from banks for the seven-day papers offered by the Bangko Sentral ng Pilipinas (BSP) on Wednesday reached P242.052 billion, going beyond the P120 billion on the auction block and also higher than the P231.351 billion in tenders logged on May 13 for a P100-billion offering.

Banks asked for returns ranging from 2.25% to 2.2580%, a slimmer margin compared to the 2.25% to 2.2625% seen last week. This caused the average rate of the one-week deposits to settle at 2.2543%, inching down by 0.35 basis point from the 2.2578% logged a week ago.

The TDF is the BSP’s primary tool to shore up excess liquidity in the financial system and to better guide market interest rates.

The offering of the longer 14- and 28-day tenors continues to be suspended. The BSP halted offering term deposits at the onset of the enhanced community quarantine in Luzon in March to support the banking system.

“Today’s auction results show that the domestic financial market remains calm amid ample liquidity even as the enhanced community quarantine measures in NCR was eased slightly on May 16,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.

For his part, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the marginally lower average yield came after the upward correction in some commodities, including oil and rice.

“Higher rice prices recently, together with higher global oil prices could fundamentally limit the easing trend in inflation and interest rate benchmarks,” Mr. Ricafort said in a text message.

Oil prices have seen some upward correction since May, although prices are still within levels lower than what was observed before the pandemic. The slight price uptick was on the back of recovering demand, especially from major markets such as China as well as the massive production cut from oil-producing big player countries.

Meanwhile, data from the Philippine Statistics Authority showed the average farmgate price of palay or unmilled rice inched up by 0.75% to P18.81 per kilogram in the first week of May. Average wholesale price of regular-milled rice also picked up by 0.88% to P35.40 while the retail price rose by 0.11% to P37.90. — Luz Wendy T. Noble

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