Banking sources said the exchange rate would dictate the bids in today's auction.
"If the peso stays above the 56:$1 level, then, the bid rates could go up between 15 and 30 basis points," said a fixed-income trader. The market would continue to test the P56.20:$1 level this week although for today, the currency could range between 55.85 and 56.10.
During times of peso volatility, banks usually seek a higher return when lending to the government instead of using these to buy dollars where they could earn more.
Rates of the 91 and 182-day treasuries have eased in the first two auctions of the year while that of the 364-day had been going up. On Monday, even the shorter tenors could be under pressure despite the excess liquidity that the market is holding, according to traders.
Two weeks ago, the 91-day rate slid by 8.6 basis points to 6.16 percent.
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