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REFILE-China's money rates fall on ample liquidity after c.bank cash injection
October 20, 2017 / 7:17 AM / a month ago

REFILE-China's money rates fall on ample liquidity after c.bank cash injection

 (Refiles to fix typo in third last paragraph)
    SHANGHAI, Oct 20 (Reuters) - China's primary money rates
fell for the week on ample liquidity as the central bank made
its biggest weekly net cash injection in nine months, seeking
market stability for the all-important Communist Party congress,
traders said.
    The once-every-five-years congress began with comments from
Chinese President Xi Jinping that China will deepen
market-oriented reforms of its exchange rate as well as its
financial system. The party congress will close on Oct.24.
    The volume-weighted average rate on the benchmark seven-day
repo traded in the interbank market, considered
the best indicator of general liquidity in China, was 2.8024
percent on Friday afternoon, around 2 basis points lower than
the previous week's closing average rate. 
    Market participants attributed falls in money rates to
loosened cash conditions as the central bank generously offered
funds this week through open market operations.
    The People's Bank of China (PBOC) injected a net 560 billion
yuan ($84.63 billion) via its reverse bond repurchase agreements
for the week, compared with a net drain of 240 billion yuan a
week earlier. The weekly net cash injection was the biggest
since mid-January.
    In the bond market, yields on 10-year Chinese treasury bonds
 rose to 3.726 percent on Friday, around 4 basis
points higher than the previous week's close. Bond yields rise
when prices fall.
    A trader at a Chinese bank said rises in treasury yields
were driven by the positive prospects for economic growth seen
in remarks from central bank Governor Zhou Xiaochuan earlier in
the week, and third quarter gross domestic product data issued
on Thursday. 
    Solid economic performance suggested that the authorities
would likely continue pushing forward with its deleveraging
campaign, which piled pressure on the bond market, the trader
added.
    China's economy grew 6.8 percent over the July-September
period from a year earlier, in line with market expectations and
slightly slower than the second quarter.
    The outcome was slightly at odds central bank governor Zhou
Xiaochuan's more optimistic growth outlook on Sunday, when he
said GDP could grow 7 percent in the second half of this year.


    Key money rates at a glance:
  
                  Volume-wei  Previous    Change (bps)               Volume
                  ghted       day (%)                                
                  average                                            
                  rate (%)                                           
 Interbank repo market
 Overnight        2.5451      2.5603      -1.52                      0.00
                                                                     
                                                                     
 Seven-day        2.8024      2.8530      -5.06                      0.00
                                                                     
                                                                     
 14-day           3.9818      4.0863      -10.45                     0.00
                                                                     
                                                                     
 Shanghai stock exchange repo market
 Overnight        2.5500      2.3650      +18.50                     247,639.2
                                                                     0
                                                                     
 Seven-day<CN7DR  3.4000      2.9800      +42.00                     43,246.30
 PO=SS>                                                              
 14-day           4.1050      3.9300      +17.50                     11,065.10
                                                                     
                                                                     
 PBOC Guidance Rates
 Overnight        2.5500      2.5700      -2.00                      
 <CN1DRPFIX=CFXS                                                     
 >                                                                   
 Seven-day        3.1000      3.1000      +0.00                      
 <CN7DRPFIX=CFXS                                                     
 >                                                                   
 14-day           4.1000      4.2000      -10.00                     
 <CN14DRPFIX=CFX                                                     
 S>                                                                  
 SHANGHAI INTERBANK OFFERED RATE
 Overnight        2.5782      2.5920      -1.38                      
                                                                     
 Seven-day        2.8379      2.8405      -0.26                      
                                                                     
 Three-month      4.3758      4.3737      +0.21                      
                                                                     
 
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=        3.8100               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 = 6.6170 Chinese yuan)

    
 (Reporting by Winni Zhou and David Stanway; Editing by Eric
Meijer)
  

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