SHANGHAI, Mar 13: Chinese money rates fell this week as the end of subscriptions for a slew of initial public offerings (IPOs) ensured fresh liquidity flowed back into the money market, traders said.
Rates are likely to drop further in coming weeks as the market widely expects the central bank to continue loosening monetary policy, pumping more funds into the market, they said. ‘It’s easy to borrow money late this week after the IPOs,’ said a dealer at a Chinese commercial bank in Shanghai. ‘Market sentiment is also boosted by the PBOC’s signal to push funding costs lower to support the economy.’ The weighted average of the benchmark seven-day bond repurchase agreement was quoted at 4.71 percent by midday, down 6 basis points from the close last Friday, while the 14-day rate fell 7 basis points to 4.76 percent. The China Securities Regulatory Commission approved 24 IPOs to be launched last week as companies take advantage of a stock market rally to raise funds.
Most of the IPOs completed their subscriptions by Friday, with liquidity temporarily locked up having now been released. The People’s Bank of China (PBOC) cut official interest rates on Feb. 28 in its latest effort to support the economy as momentum slows, after its first rate cut in more than two years in November and a reduction in banks’ reserve requirement ratios (RRR) in early February.
(AGENCIES)
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