SHANGHAI, Feb 6: China’s money rates jumped on Wednesday, with dealers saying that liquidity remained tight as banks kept cash in anticipation of a surge in withdrawals for the week-long new year holiday.
‘Today’s money is tighter than before and demand exceeds supply; even some of the big banks are not willing to lend funds,’ said a dealer at a Chinese commercial bank in Shanghai.
But dealers said conditions may not tighten much more given expectations the central bank will continue to inject additional funds via reverse repos on Thursday, following a single-day record injection of 450 billion yuan on Tuesday.
China’s interbank market will be closed from Feb. 9 through Feb. 17 for the Spring Festival holiday.
The benchmark weighted-average seven-day bond repurchase rate jumped 32 basis points to 3.70 percent from 3.38 percent at the close on Tuesday.
The 14-day repo rate gained to 4.20 percent from 4.06 percent, and the one-day repo rate jumped to 3.61 percent from 3.26 percent.
In the bond market, interest rate swaps (IRS) were barely changed on Wednesday. One-year IRS stood at 3.12 percent, down from Tuesday’s close of 3.13 percent, while the benchmark five-year IRS held steady at 3.74 percent.
(AGENCIES)
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