BSP adopts new auction time for overnight RRP facility to spur interbank lending

The Bangko Sentral ng Pilipinas (BSP) is taking significant steps to bolster all-day interbank lending by adjusting the auction time of its overnight reverse repurchase (RRP) facility.

Beginning May 29, the auction will now take place before 12 PM, aligning with the BSP’s vision of fostering active liquidity management and promoting interbank lending activity throughout the day.

The RRP facility serves as a crucial component of the BSP’s monetary operations, enabling the central bank to borrow funds from banks using government securities as collateral.

By carefully managing the circulation of money and supporting the achievement of its inflation target, the BSP ensures the effective functioning of the economy.

Currently, the overnight RRP operates on a fixed-rate basis, where bidders are granted a portion of the overall offer based on the size of their bids. The minimum bid size has been set at P10 million, while the maximum bid size is capped at 20 percent of the total offer.

These developments come in the wake of BSP Governor Felipe M. Medalla’s recent comments, outlining a long-term plan to eliminate the rationing of the RRP facility. Currently limited to P305 billion, this move reflects the BSP’s commitment to enhance the efficiency and effectiveness of its monetary operations.

BSP to allow pre-termination of peso NDFs

The Bangko Sentral ng Pilipinas (BSP), is set to introduce amendments to its foreign exchange (FX) regulations, allowing for the pre-termination of peso non-deliverable forwards (NDFs).