BSP mops up PHP 1.7 trillion from market

The Bangko Sentral ng Pilipinas (BSP) has siphoned off P1.72 trillion in excess money supply from the market as of January, based on its latest monetary policy report.

“As of 31 January 2024, the total outstanding amount absorbed in the BSP liquidity facilities stood at about P1.72 trillion,” the central bank said.

It said about 45.3% or P778.27 billion was absorbed through BSP securities.

The central bank also absorbs liquidity from banks through the term deposit facility (TDF). About 23.2% or P398.35 billion of total placements were from the TDF.

Meanwhile, placements in the BSP’s overnight reverse repurchase (RRP) facility stood at P365 billion (21.2%), while those put in the overnight deposit facility amounted to P177.4 billion (10.3%).

The weighted average interest rate (WAIR) for the seven-day term deposits inched up to 6.5871% on Jan. 31 from 6.5847% previously. The WAIR for the 14-day papers fell to 6.6106% from 6.6187% in the previous auction.

As for the BSP bills (BSPB), the WAIR for the 28-day BSPB increased to 6.7726% on Feb. 2 from 6.7703% a week prior. Meanwhile, the WAIR for the 56-day BSPB declined to 6.7693% from 6.7740%.

“The auction results for the TDF and the BSPB during the review period reflected how eligible counterparties managed their asset and liquidity positions as they tended to client requirements during the holiday season. There has also been a noted preference for the 56-day BSPB,” the central bank said.

For the daily RRP auction, the average bid-to-cover ratio (BCR) for the period of Jan. 31-Feb. 6 was at 0.97x, higher than the BCR of 0.90x recorded for the period of Jan. 24-Jan. 30.

In September last year, the BSP shifted to a variable rate format for the RRP facility.

The main objective of the BSP’s monetary operations is to control and manage inflation, which the central bank expects to average 3.6% this year and 3.2% in 2025.

Last week, the Monetary Board extended its hawkish pause for a third straight meeting, keeping its key rate at a 16-year high of 6.5%. — Keisha B. Ta-asan