SHANGHAI, Nov 19: China’s seven-day money rate rebounded on Monday as traders said the key borrowing rate had come back into balance after excess liquidity at the end of last week had driven the rate to a month-low.
The benchmark weighted-average seven-day bond repurchase rate rose 30.36 basis points to 3.2080 percent around midday from 2.9044 percent at the close on Friday.
Dealers said Friday’s rate fall was partly due to rebates on excess pre-payments related to reserve requirement ratios made earlier in the year, which buoyed commercial banks’ cash balances.
‘The central bank is happy with the seven-day rate between 3.1 and 3.3 percent,’ said a trader at a Chinese commercial bank in Shanghai. ‘Friday was unusually low and so the price had to come back up.’
The 14-day repo rate fell slightly to 3.4348 percent from 3.4436 percent, and the one-day repo rate fell to 2.1638 percent from 2.2780 percent.
The 28-day repo rate rose 36.56 bps to 3.9004, potentially reflecting increased pressure on longer tenors as banks and companies prepare for the seasonal surge of demand for cash in the final few weeks of the year, traders said.
‘Liquidity is quite good for now but longer-term, coming towards the year-end, it is going to be harder to borrow,’ added the trader. (agencies)
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