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5 years ago
China's key money rate rises on conservative cash injection
January 15, 2013 / 4:01 AM / 5 years ago

China's key money rate rises on conservative cash injection

* 7-day repo rate rises 7 bps to 2.82 pct
    * C.bank only injects 10 bln yuan through open market ops
    * Weak demand for 7-day reverse repos

    By Chen Yixin and Pete Sweeney
    SHANGHAI, Jan 15 (Reuters) - China's key money rates
rebounded slightly on Tuesday from one-month lows after the
People's Bank of China injected a mere 10 billion yuan ($1.61
billion) into money markets through open market operations. 
    China's central bank issued 10 billion yuan worth of 14-day
reverse bond repurchase agreements on Tuesday, but refrained
from issuing seven-day reverse repos. Dealers said that adequate
market liquidity meant there was little demand for the seven-day
tenor.
    "Today's rise is just a small rebound after rates sank
yesterday, it doesn't signify much," said a dealer at a large
state-owned bank in Beijing. 
    "(Financial) institutions have enough funds on hand.
Besides, if we need more, we still have a chance (to take up
seven-day reverse repos) on Thursday," he said.
    Despite today's move, market players expect the central bank
to issue more seven-day reverse repos in upcoming weeks to meet
growing cash demand for the Spring Festival Holiday, which
starts on Feb. 9. 
     The benchmark weighted-average seven-day bond repurchase
rate rose 7 basis points to 2.82 percent on
Tuesday up from 2.75 percent at Monday's close. Dealers consider
rates below 3 percent indicative of ample money supply.
    The 14-day repo rate gained slightly to 2.81
percent from 2.74 percent, and the one-day repo rate
 inched up to 2.10 percent from 2.04 percent.

                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         2.8212     2.7492    + 7.20
7-day SHIBOR           2.8710     2.7940    + 7.70 
 Note: Repo rate is weighted average.
     
($1 = 6.2192 Chinese yuan)

 (Editing by Kim Coghill)

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