SHANGHAI, Mar 26: China’s money rates gained slightly on Tuesday after the central bank drained funds from the interbank market via open market operations.
China’s central bank drained 32 billion yuan ($5.15 billion) from the money markets through 28-day bond repurchase agreements on Tuesday. With only five billion yuan of previously-issued repos due to mature this week, the central bank’s action guarantees a net drain of at least 27 billion yuan this week.
The benchmark weighted-average seven-day bond repurchase rate rose 12 basis points to 3.04 percent from Monday’s close to 2.92 percent.
The 14-day repo rate jumped to 3.73 percent from 3.50 percent, and the one-day repo rate rose to 1.65 percent from 1.62 percent from Monday’s close.
Dealers said the major reason for a jump in the 14-day repo rate is demand for funds ahead of the Tomb Sweeping Day holiday, which begins on April 4, as well as the end of the quarter.
Despite Tuesday’s rise, conditions remain comfortable, as a seven-day rate of 3.04 percent is generally seen as signalling loose conditions.
Dealers said money conditions could remain ample in the near term, thanks to inflow of liquidity through other channels, especially foreign exchange.
The official Shanghai Securities News reported on Monday that hot money is flowing into the Chinese market due to the steady recovery of the economy.
(AGENCIES)
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