BSP exec explains TDF volume offer

MANILA -- A ranking Bangko Sentral ng Pilipinas (BSP) official said the expected higher demand for cash during the Holy Week and the tax filing season made monetary officials decide not to offer the 28-day term facility on March 27.

BSP Deputy Governor Diwa Guinigundo told reporters Thursday the TDF volume offering is based on their projection for cash requirements of banks and their clients.

Holy Week starts on April 14, while the deadline for filing of income tax is on April 15.

Guinigundo also denied claims by some economists that the adjustments in the TDF offer were due to tightness in domestic liquidity.

He cited the government’s debt issuance exercise and outflows from the equities market as among the factors that some economists had noted in saying that domestic liquidity is facing some hurdles.

For one, the Bureau of the Treasury recently issued PHP235.9-billion worth of Retail Treasury Bond.

Guinigundo said this exercise “in effect makes the national government part of the open market operation.”

He said proceeds of the bond sale were deposited with the BSP but the funds would not stay long with the central bank because the national government would use it to pay for the salaries of state workers and to pay contractors, among others.

“So the so-called tightness in the market is temporary,” he added.

BSP data show that only the seven-day Term Deposit Facility (TDF) and the 14-day tenor will be offered during the auction next week.

While offer for the seven-day TDF remains at PHP20 billion, the 14-day facility will be offered for PHP10 billion, lower than the PHP20 billion this week.

Relatively, the BSP did not offer the 28-day facility during the auction last March 13. (PNA)

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