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China's money rates mixed as PBOC injects most cash in 3 years
January 26, 2016 / 3:02 AM / 2 years ago

China's money rates mixed as PBOC injects most cash in 3 years

SHANGHAI, Jan 26 (Reuters) - China's primary money rates
were mixed on Tuesday after the central bank injected the most
cash into money markets in three years, ahead of strong demand
over the long Lunar New year holiday and amid reports of rising
capital outflows.
    The People's Bank of China (PBOC) injected 440 billion yuan 
($66.89 billion) into the banking system through open markets
operations on Tuesday, the most on a daily basis since February
2013. 
    Cash demand usually rises ahead of the Lunar New Year
celebrations beginning in late January or early February, and
the bank acts to offset this with large temporary injections.
    Injections by the central bank this year, however, have been
much larger than usual, with authorities more anxious than ever
to avoid any holiday cash crunch with the country's stock
markets in turmoil and economic growth at 25-year lows.
    Some analysts see this year's record injections as partly
intended to offset the impact on domestic liquidity of currency
market intervention to support the yuan. 
    Spikes in onshore short-term borrowing costs in recent weeks
- despite massive cash injections by the central bank - suggest
capital outflows are intensifying, some analysts have said.
    Market response to the latest injection was mixed. 
    The volume-weighted average rate of the benchmark seven-day
repo traded in the interbank market, considered the
best indicator of general liquidity in China, was 2.25 percent,
down 4 basis points from the previous day's closing average
rate. 
    The Shanghai Interbank Offered Rate (SHIBOR) for same tenor
fell to 2.36 percent, down one basis point from the previous
close.
    The one-day or overnight rate stood at 1.95 percent, down
one basis point and the 14-day repo stood at 2.96 percent, up
four basis points. The one-month repo was down 7 basis points to
3.29 percent.
    The spread of the five-year credit default swap rate on
Chinese sovereign debt rose 1.98 percent at
126.01.    

 Key money rates at a glance:
  
                  Volume-wei  Previous    Change (bps)
                  ghted       day (%)     
                  average                 
                  rate (%)                
 Overnight        1.9482      1.9620      -1.38  
                                          
                                          
 Seven-day        2.2520      2.2897      -3.77   
                                          
                                          
 14-day           2.9631      2.9196      +4.35  
                                          
                                          
 Overnight        2.8800      2.0350      +84.50
                                          
                                          
 Seven-day<CN7DR  2.7300      3.2400      -51.00     
 PO=SS>                                   
 14-day           3.9500      3.9800      -3.00    
                                          
                                          
 Overnight        1.9700      2.0500      -8.00      
 <CN1DRPFIX=CFXS                          
 >                                        
 Seven-day        2.3800      2.4800      -10.00      
 <CN7DRPFIX=CFXS                          
 >                                        
 14-day           2.9100      3.7000      -79.00      
 <CN14DRPFIX=CFX                          
 S>                                       
 Overnight        1.9970      2.0090      -1.20     
                                          
 Seven-day        2.3630      2.3760      -1.30     
                                          
 Three-month      3.0730      3.0415      +3.15     
                                          
 
KEY INTEREST RATE SWAPS:
 Instrument            RIC         Rate          Spread vs 1 yr
                                                 official deposit
                                                 rate*
 2 yr IRS based on 1   CNABAD2YF=        1.5433            0.0433
 year benchmark                                  
 5 yr 7-day repo swap  CNYQB7R5Y=        2.5200               n/a
 
*This spread can be seen as a proxy for forward-looking market
expectations of an interest rate cut or rise
    

($1 = 6.5782 Chinese yuan renminbi)

    
 (Reporting by Nathaniel Taplin; Editing by Kim Coghill)

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