T-bill rates are rising everywhere

Elijah Felice Rosales – The Filipino Star

October 5, 2021 | 00h00

MANILA, Philippines – Treasury bill rates rose across the board yesterday as investors expect inflation to remain high for the remainder of the year.

The Treasury Office said it had allotted the proposed 15 billion peso treasury bills in full, with tenders submerging auctions nearly four times.

The yield on 91-day Treasury bills – the benchmark for short-term interest rates – jumped 2.5 basis points to 1.085%; 182-day securities rose 0.6 bps to 1.391%; while the 364-day duration increased 0.2bp to 1.584 percent.

National Treasurer Rosalia de Leon said investors have asked for a rate hike on their purchases to cover uncertainties as the pace of growth in commodity prices remains high.

Inflation, or the general rise in the prices of goods and services, soared to 4.9% in August, as food prices rose due to the series of storms that ruined agricultural production.

With that, inflation for the year averaged 4.4 percent in August, above the government’s target range of two to four percent.

For September, experts expect inflation to exceed 5%, the highest since December 2018, due to rising prices for food, fuel and utilities. When inflation rises, investors tend to demand higher returns to protect their capital from currency risks.

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