The yield of Bangko Sentral ng Pilipinas (BSP) securities or the 28-day BSP bills decreased this week to 1.7211 percent while bids also fell.

Peso bills

The average rate was down from August 20’s 1.7309 percent. In the meantime, the yields accepted ranged from 1.7100 percent to 1.7305 percent, lower than the previous week’s 1.7150 percent to 1.7380 percent.

Total tenders, in the meantime, reached P144.79 billion versus offer of P100 billion. This was lower compared to the previous week’s P153.98 billion.

The bid coverage ratio also fell to 1.4479 from 1.5398, indicating more subdued demand for BSP bills.

The BSP securities facility was launched in September 2020 to absorb excess liquidity, particularly BSP’s own infusion of more than P2.2 trillion in liquidity, equivalent to 12.5 percent of the country’s full year nominal GDP for 2020.

Mopping up liquidity via BSP open market facilities help manage and control inflation.

BSP Governor Benjamin E. Diokno, during Thursday’s Development Budget Coordination Committee or DBCC budget presentation before the Lower House, said the average inflation is still seen settling “slightly” above the upper end of the two-four percent target for this year. But with “timely implementation of non-monetary initiatives and reforms to mitigate supply-side pressures on meat and other food prices” the average inflation could hit the midpoint of the target range in 2022 and 2023.

The BSP recently raised the inflation forecasts for 2021 to 4.1 percent, and 3.1 percent for 2022 and 2023. The previous forecasts was four percent for 2021, and three percent for the next two years.

Source: Manila Bulletin (