March 20, 2013 / 5:07 AM / 4 years ago

China money rates mixed, quarter-end fund demand in focus

* Benchmark 7-day rate jumps 34 bps to 3.30 pct
    * Market players focus on quarter-end money demand

    By Chen Yixin and Pete Sweeney
    SHANGHAI, March 20 (Reuters) - China's benchmark seven-day
money rate and the 14-day rate rose further on Wednesday due to
strong demand as the end of the quarter approaches, but the
overnight rate slid again.
    "Money is abundance, the demand is focused on quarter-end
funds," said a dealer at a Chinese commercial bank in Shanghai.
    The weighted-average seven-day bond repurchase rate
 jumped by 34 basis points to 3.30 percent from
2.96 percent at the close on Tuesday and the 14-day repo rate
 advanced to 3.53 percent from 3.38.
    But the shortest overnight rate fell to 2.03
from 2.20.
    Dealers said they did not expect money rates to rise sharply
in the near term, unless the People's Bank of China drains
significantly more funds during upcoming open market operations
on Thursday.
    The PBOC has drained a total of 602 billion from the
interbank market this year. However, rates have remained
accommodative because funds continue to flow into the market
from other sources, including forex sterilization operations by
the PBOC.
       
    
                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         3.2955     2.9633     +33.22
7-day SHIBOR           3.2780     2.9730     +30.50 
 Note: Repo rate is weighted average.

    
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    MARKET DRIVERS
    - Markets spin on liquidity switches 
    - More TSF, less loans in 2013 
    - Monetary policy to be neutral in 2013 
    
    DATA POINTS
    - External liquidity tracker: Open market operations and
fiscal deposits are the main sources of liquidity in recent
months GRAPHIC: r.reuters.com/das95t
    - Impact of maturing central bank bills and repos GRAPHIC: r.reuters.com/kas95t
    - China's interest-rate swap curve has steepened GRAPHIC: r.reuters.com/has95t
    - China's government bond yield curve has steepened GRAPHIC:
r.reuters.com/jas95t
    - China corporate bond spreads have narrowed slightly 
GRAPHIC: r.reuters.com/mas95t
    - Hot money tracker: Hot outflows may be reducing liquidity,
but the impact is small GRAPHIC: r.reuters.com/was95t
    
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 (Editing by Sanjeev Miglani)

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