SHANGHAI, May 10: China’s key seven-day money rates fell on Friday as the market digested a weekly fund injection by the central bank, but dealers said they expect rates to rise slightly in coming weeks due to upcoming tax payments.
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.
The weighted average of the unofficial benchmark seven-day repo fell 14 basis points to 2.97 percent by midday, from 3.11 percent on Thursday.
The overnight rate inched up to 2.15 from 2.12 percent, while the 14-day rate eased to 2.99 percent from Thursday’s 3.10 percent.
Money conditions remained ample, supported by data showing continued heavy capital inflows from overseas markets into China since the third quarter of last year.
To keep the inflows from pushing up the yuan exchange rate too abruptly, the central bank has been buying dollars and selling yuan, and those yuan have entered the interbank market, keeping downward pressure on rates. (AGENCIES)
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