SHANGHAI, May 13: China’s money rates were mixed on Monday as market players waited for the central bank to announce whether it will issue more 3-month bills on Tuesday, dealers said.
The People’s Bank of China was asking commercial banks what their demand was for three-month bills, seven- and 14-day reverse repos and 28-day forward repos, dealers told Reuters early on Monday.
The central bank resumed issuing bills for the first time last week after a 17-month hiatus. Bills drain funds for tenors between three months and three years, thus having a stronger potential impact on base money supply than the bond repurchase agreements upon which it relied exclusively in 2012.
The weighted average of the unofficial benchmark seven-day repo fell seven basis points to 2.90 percent by midday, from 2.97 percent on Thursday.
The overnight rate inched up to 2.16 from 2.14 percent, while the 14-day rate was up to 3.02 percent from Friday’s 2.97 percent.
‘We are still paying more attention to the situation with central bank bills, which could give some hint of the next move in the market,’ said a dealer at a state-owned bank in Beijing. ‘However, money conditions still remained ample today.’
Dealers said upcoming tax payments for firms have so far had little impact on the market, but money rates were likely to rise by the end of this month.
Chinese firms pay estimated corporate income tax each month, but balance their quarterly and annual taxes during a subsequent grace period. Annual tax payments for the previous year are typically balanced in April and May.
(agencies)
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