Market pushes T-bills higher as peso depreciates

Fears of another US Fed rate hike sent Treasury bill rates up and pushed the peso down to P40.95 $1 yesterday.

The increase for all three tenors would have been higher if the government had accepted all bids.

Investors actually seemed to be shying away from the T-bill market, with total tenders dropping to only P3.27 billion which is even lower than the offering volume of P4 billion.

The government auction committee headed by Deputy Treasurer Eduardo Mendiola wanted to reject all the bids because "they were mostly throw-away bids."

However, Finance Secretary Jose T. Pardo ordered the committee to accept some bids.

The 91-day rate rose by 5.3 basis points to 8.847 percent from last week's average rate of 8.794 percent. There was only a partial award of P550 millionf or the 91-day tenor out of total tenders of only P885 million.

The 182-day rate climbed by 10.4 points to average at 9.588 percent. Again, there was a partial award of only P640 million out of total tenders of P1.72 billion.

For the 364-day tenor, the rate moved up by 11.6 points to average this week at 10.5 percent. The government auction committee accepted a mere P100 million out of total tenders of P664-million.

The peso also reacted to the US Fed rate hike fear, with some foreign exchange dealers admitting that increased political risk is another reason for the fall.

One dealer said President Estrada made a major blunder last Saturday during a function World Bank president James Wolfenson attended. In his speech, the President virtually admitted by wayof a joke that the country is being run like hell.

Other dealers said regional movements are affecting the peso, while others said there is a strong corporate demand for dollars.

The peso closed at P40.95 to $1 which was also the low for the day.

Dealers said the Bangko Sentral ng Pilipinas stopped supporting the peso at P40.90 to $1.