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YIELDS on the Philippine central bank’s term deposits fell on Wednesday, with the seven- and 14-day tenors both oversubscribed as February inflation remained within forecast.

Demand for the term deposit facility (TDF) hit P303.661 billion, higher than the P270 billion on the auction block. Bids last week reached P190.891 billion against a P210-billion offer.

Tenders for the one-week term deposits reached P170.144 billion, more than the P150-billion offer. Last week, bids hit P115.931 billion against a P120-billion offer.

Banks asked for yields ranging from 6.53% to 6.57%, narrower than 6.51% to 6.85% at the Feb. 28 auction. The average rate of the seven-day debt fell by 0.33 basis point (bp) to 6.5617% from last week.    

Meanwhile, the 14-day deposits attracted P133.517 billion in bids, higher than the P120 billion sold by the Bangko Sentral ng Pilipinas (BSP). Last week, tenders hit P74.96 billion against the P90 billion on offer.

Accepted rates for the two-week debt ranged from 6.5745% to 6.6150%, lower than 6.575% to 6.625% last week. This caused the tenor’s average rate to dip by 0.03 bp to 6.5951%.

The BSP has not auctioned off 28-day term deposits for more than three years now to give way to its weekly sale of securities with the same tenor.

The central bank term deposits and 28-day bills are used to mop up excess liquidity in the financial system and to better guide market rates.

Term deposit yields went down as inflation remained within the central bank’s forecast despite picking up in February, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

Inflation quickened to 3.4% last month from 2.8% in January and 8.6% a year ago. It was above the 3% median estimate in a BusinessWorld poll of 16 analysts last week but within the central bank’s 2.8-3.6% forecast.

This was the first time that inflation picked up month on month since September. For the first two months, it averaged 3.1%, within the BSP’s 2-4% annual target. — Aaron Michael C. Sy