SHANGHAI, Mar 20: China’s benchmark seven-day money rate and the 14-day rate rose further on Wednesday due to strong demand as the end of the quarter approaches, but the overnight rate slid again.
‘Money is abundance, the demand is focused on quarter-end funds,’ said a dealer at a Chinese commercial bank in Shanghai.
The weighted-average seven-day bond repurchase rate jumped by 34 basis points to 3.30 percent from 2.96 percent at the close on Tuesday and the 14-day repo rate advanced to 3.53 percent from 3.38.
But the shortest overnight rate fell to 2.03 from 2.20.
Dealers said they did not expect money rates to rise sharply in the near term, unless the People’s Bank of China drains significantly more funds during upcoming open market operations on Thursday.
The PBOC has drained a total of 602 billion from the interbank market this year. However, rates have remained accommodative because funds continue to flow into the market from other sources, including forex sterilization operations by the PBOC.
(AGENCIES)
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