Treasury bill (T-bill) rates declined across-the-board in yesterday's weekly auction in reaction to the lower-than-expected budget deficit for the month of January.
The bellwether 91-day T-bill rated moved down 10.7 basis points to average this week at 8.790 percent from last week's 8.890 percent with a full award of the P1-billion offering as tenders reached P1.93 billion.
The 182-day T-bill rate shed a bigger 21.4 basis points to average this week at 9.468 percent from last week's 9.682 percent with a full award of the P1.5 billion offering as tenders swamped the government auction committee.
Total tenders for the 182-day T-bill amounted to P4.22 billion.
The 364-day T-bill rate fell by 26.2 basis points to average this week at 10.367 percent from last week's 10.629 percent with a fullaward of the P1.5 billion offering as total tenders hit P4.295 billion.
According to National Treasurer Leonor Briones, the huge amount of tenders clearly showed that the financial system is liquid.
The liquid system, combined with a healthy fiscal position, Briones predicted will ensure that interest rates will continue to drop in the coming weeks.
"This will be a strong signal on the matter of interest rates," Briones said ladding that with the healthy cash position and lower-than-programmed deficit, the chances of maintaining low interest rates is very optimistic."
Earlier, investors were jittery that the recent hike in US interest rates will create an upward pressure on local interest rates to remain competitive.
However, an interest rate hike will not be helpful for the economy as government still needs to stimulate productive economic activity.
Some government securities dealers expect the 91-day T-bill rate moving back down to a level of about 8.500 percent.