SHANGHAI, Nov 28: China’s key seven-day money rate jumped on Wednesday in light trade, recovering from a one-month low struck on Friday.
The benchmark weighted-average seven-day bond repurchase rate jumped 46.53 basis points to 3.3534 percent from 2.8881 percent at close on Tuesday, in line with the central bank’s seven-day reverse repo rate of 3.35 percent.
The benchmark traded seven-day repo rate has frequently been lower than the official seven-day reverse repo rate in recent weeks. This unusual situation stemmed from strong liquidity and low money demand, but because the official rate normally sets the floor, there has been upward pressure on the seven-day rate, traders noted.
Dealers said the benchmark rate was still within a reasonable range despite the increase.
‘It’s easy to move the (seven-day) money rate when demand and supply for seven-day repos are weak,’ said a dealer at a large state-owned bank in Beijing.
‘The long-term and overnight tenor are still moving within a tight range, which means the market still expects a stable money situation,’ he said.
The 14-day repo rate rose to 3.3609 percent from 3.2420 percent, and the one-day repo rate gained to 2.3273 percent from 2.3215 percent.
Dealers said a cautious mood in the runup to the end of the month might also help explain the jump in the benchmark rate.
Current Prev close Change
(pct) (bps) 7-day repo 3.3534 2.8881 +46.53 7-day SHIBOR 3.3617 2.8708 +49.09 Note: Repo rate is weighted average.
($1 = 6.22 Chinese yuan)
(AGENCIES)
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