Interest rates continue to dip

Interest rates continued to soften yesterday as reflected in the results of auction of government’s high-yielding cash management bills (CMBs).

Rates for the 42-day CMBs shed 70.9 basis points to average at 15.130 percent, resulting in the full award of the P2-billion offering.

The 70-day CMBs went down by a larger margin of nearly 82 points to average this week at 15.570 percent. The government auction committed awarded in full the P2-billion offering volume.

Traders said the market remained liquid as total tenders for the P4-billion CMB offering amounted to almost triple at P11.68 billion.

Bangko Sentral ng Pilipinas (BSP) Governor Rafael B. Buenaventura said that following the drop in CMB yields, interest rates "are now going back to a normal yield curve."

"People now feel more comfortable with the one year scenario," he added.

Based on the decline in the CMB yield, Buenaventura projected that on Monday, rates for Treasury bills (T-bills) will drop further.

"The BSP itself is trying to bring down interest rates but is carefully looking at the foreign exchange movement," the BSP chief stressed.

Buenaventura indicated that if the peso-dollar rate continues to stabilize, the BSP may be able to effect a downward adjustment in its overnight rates before the end of the year.