SHANGHAI, Jan 17: China’s money rates moved in a narrow range on Thursday thanks to adequate market liquidity despite a net drain of 70 billion yuan this week via open market operations.
China’s central bank injected 20 billion yuan ($1.61 billion) into the interbank market through 14-day reverse bond repurchase agreements on Tuesday and Thursday. This was the smallest injection since June 2012, when the central bank began relying primarily on reverse repos to support market liquidity.
The People’s Bank of China (PBOC) has allowed maturing instruments to drain net funds from the market every week in January, without noticeable impact on rates. In 2013, billion yuan has left the market.
Dealers expect the PBOC to resume issuing seven-day reverse repos in coming weeks as financial institutions stock up on money to meet cash demand for the Spring Festival Holiday, which starts on Feb. 9.
The benchmark weighted-average seven-day bond repurchase rate inched down 2 basis points to 2.76 percent from 2.78 percent at the close on Wednesday.
The 14-day repo rate rose slightly to 2.83 percent from 2.79 percent, and the one-day repo rate fell to 2.01 percent from 2.04 percent.
The official China’s Securities Journal said in a commentary published on Thursday that the decline in the amount of reverse repos being issued showed the central bank’s commitment to keeping the money supply ample but stable.
Current Prev close Change
(pct) (bps)
7-day repo 2.7626 2.7833 – 2.07 7-day SHIBOR 2.8050 2.7880 + 1.70
Note: Repo rate is weighted average.
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