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China's money rates stable, c.bank issues 28-day reverse repo
September 13, 2012 / 5:40 AM / 5 years ago

China's money rates stable, c.bank issues 28-day reverse repo

* 7-day repo rate rises slightly to 3.4380 pct
    * C.bank issues 28-day reverse repos for first time
    * This tenor helps cash demand at end of month, during
holiday

    SHANGHAI, Sept 13 (Reuters) - China's money rates were
little changed on Thursday, with dealers citing an abundance of
liquidity in the market after the People's Bank of China (PBOC)
issued 28-day reverse bond repurchase agreements for the first
time since it started regular open market operations in 2003.
    The central bank auctioned a total of 55 billion yuan ($8.7
billion) in seven- and 28-day repo via open market operation,
with their rates fixed at 3.35 and 3.60 percent, respectively.
 
    Traders noted that the new 28-day repos would help banks
maintain liquidity over long holidays and month-end cash draws
resulting from banks sequestering money to meet deposit-to-loan
ratios and other requirements.
    "Market liquidity is good, and the demand for the 28-day
repo is strong as it will help cash demand at the end of
September and the coming long holiday," said a dealer at a
Chinese bank in Shanghai.
    The market will be closed for the week starting Oct. 1 for
the National Day holiday.
    The benchmark weighted-average seven-day bond repurchase
rate edged up 0.60 basis points to 3.4380 percent
from 3.4320 percent at the close on Wednesday.
    The 14-day repo rate fell to 3.2934 percent
from 3.3505 percent, and the shortest tenor, overnight one-day
repo rate, rose to 2.6925 percent from 2.6113
percent.
    Dealers said they had no expectations of the PBOC cutting
banks' reserve requirement ratio in the near term after the
issuance of the 28-day repos. The central bank appears to want
to use the seven-day reverse repo rate to guide money market
rates, but use 28-day repos to fill a gap ahead of the holidays.
    
                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         3.4380     6.4320    + 0.60
7-day SHIBOR           3.4350     3.4346    + 0.04  
 Note: Repo rate is weighted average.
     
($1 = 6.3264 Chinese yuan)

 (Reporting by Chen Yixin and Pete Sweeney; Editing by
Jacqueline Wong)

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