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China's money rates fall, demand focused on upcoming holiday
January 9, 2013 / 5:37 AM / in 5 years

China's money rates fall, demand focused on upcoming holiday

* 7-day repo rate falls 11 bps to 3.0 pct
    * Dealers report weak demand for shorter-term contracts
    * Focus on accruing funds to get through upcoming Spring

    By Chen Yixin and Pete Sweeney
    SHANGHAI, Jan 9 (Reuters) - China's money rates fell
slightly on Wednesday, with dealers reporting weak demand for
shorter-term money instruments.
    Dealers said they expected the money rates to continue to
fall in coming days thanks to ample liquidity in the market. 
    Market players are preparing for the one-week long Chinese
New Year Holiday, starting on Feb. 9.
    "Money demand is really weak given that most institutions
are not short on funds," said a dealer at a Chinese commercial
bank in Shanghai. "Also, it's not hard to borrow money at
     The benchmark weighted-average seven-day bond repurchase
rate fell 11 basis points to 3.00 percent from
3.11 percent at the close on Tuesday. 
    The 14-day repo rate dipped to 3.01 percent
from 3.18 percent, and the one-day repo rate was
down to 2.09 percent from 2.12 percent.
    The key seven-day rate hovered around 3 percent for most of
last month until Dec 20, when the traditional year-end squeeze
pushed the rate up to peak at 4.58 percent on the last day of
the year. A rate below 3 percent is generally seen as indicating
loose conditions. 
                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         2.9976     3.1081    -11.05
7-day SHIBOR           3.0245     3.1500    -12.55  
 Note: Repo rate is weighted average.
($1 = 6.23 Chinese yuan)

 (Editing by Eric Meijer)

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