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China's money rates up on seasonal cash demand
April 28, 2017 / 6:23 AM / 6 months ago

China's money rates up on seasonal cash demand

    SHANGHAI, April 28 (Reuters) - China's primary money rates
jumped for the week as seasonal demand for funds did little to
ease tight liquidity despite a central bank-led net cash
injection.
    The volume-weighted average rate of the benchmark seven-day
repo traded in the interbank market, considered a
key indicator of general liquidity in China, was at 2.9085
percent, around 10 basis points higher than the previous week's
closing average rate. 
    The People's Bank of China (PBOC) injected a net 70 billion
yuan ($10.16 billion) through open market operations this week,
down from a net injection of 170 billion yuan a week earlier.

    Traders said liquidity conditions remained tight in the
money market this week due to seasonal factors, including from
pressure caused by month-end demand for funds from banks to
shore up their cash buffer to meet regulatory requirements.
    "Apart from the month-end factor, cash demand from
individuals and companies ahead of the upcoming Labor Day long
weekend also went up," said a trader at a Chinese bank. 
    The trader expects liquidity conditions to loosen after the
holiday, though a second trader at a different Chinese bank
doubted that the cash situation would ease.
    Market participants also noted the government was in favour
of tighter policy to reduce financial leverage and reduce
systemic risks.
    Chinese President Xi Jinping called for increased efforts to
ward off systemic risks to help maintain financial security, the
official Xinhua news agency said this week.
    The three-day public holidays for Labor Day starts on
Saturday. Financial markets are closed on May.1.
    The Shanghai Interbank Offered Rate (SHIBOR) for the
seven-day tenor rose to 2.8699 percent, the highest since June
2015, up around 11 basis points from the previous week's close.
    The one-day or overnight rate stood at 2.7816 percent, the
highest level in two years.
    
    Key money rates at a glance:
  
                  Volume-wei  Previous    Change (bps)               Volume
                  ghted       day (%)                                
                  average                                            
                  rate (%)                                           
 Interbank repo market
 Overnight        2.7816      2.8597      -7.81                      0.00
                                                                     
                                                                     
 Seven-day        2.9085      3.0319      -12.34                     0.00
                                                                     
                                                                     
 14-day           4.1360      3.8731      +26.29                     0.00
                                                                     
                                                                     
 Shanghai stock exchange repo market
 Overnight        5.7650      3.9700      +179.50                    323,262.9
                                                                     0
                                                                     
 Seven-day<CN7DR  3.3200      3.6000      -28.00                     65,657.70
 PO=SS>                                                              
 14-day           3.3500      3.9950      -64.50                     4,108.30
                                                                     
                                                                     
 PBOC Guidance Rates
 Overnight        2.8000      2.8500      -5.00                      
 <CN1DRPFIX=CFXS                                                     
 >                                                                   
 Seven-day        4.3000      4.0000      +30.00                     
 <CN7DRPFIX=CFXS                                                     
 >                                                                   
 14-day           4.5000      4.7000      -20.00                     
 <CN14DRPFIX=CFX                                                     
 S>                                                                  
 SHANGHAI INTERBANK OFFERED RATE
 Overnight        2.8190      2.7920      +2.70                      
                                                                     
 Seven-day        2.8699      2.8449      +2.50                      
                                                                     
 Three-month      4.2974      4.2917      +0.57                      
                                                                     
 
KEY INTEREST RATE SWAPS:
 Instrument            RIC         Rate          Spread vs 1 yr
                                                 official deposit
                                                 rate*
 2 yr IRS based on 1   CNABAD2YF=        0.0000              -1.5
 year benchmark                                  
 5 yr 7-day repo swap  CNYQB7R5Y=        3.9150               n/a
 
*This spread can be seen as a proxy for forward-looking market
expectations of an interest rate cut or rise
                                       
China FX and money market guide: 
 China debt market guide:
 SHIBOR rates:
 Reports on central bank open market operations:
 New Chinese debt issues:
 Prices for central bank bills, treasury bonds and sovereign
bonds:
 Overview of China financial market data:

($1 = 6.8868 Chinese yuan)

    
 (Reporting by Winni Zhou and John Ruwitch; By Shri Navaratnam)
  

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