SHANGHAI, May 15: China’s money rates fell further on Wednesday, with the key seven-day money rate hitting a 10-week low on easy liquidity caused by capital inflows into a strengthening local currency and fund injections by the central bank.
The weighted average of the benchmark seven-day repo fell 3 basis points to 2.77 percent by midday, its lowest level since early March.
The 14-day rate was down to 2.88 percent from Tuesday’s 2.94 percent, but the overnight rate rose slightly to 2.26 percent from 2.25 percent.
The central bank turned to injecting money during open market operations in late April as data showed China’s economic recovery wobbling. At the same time, hot money inflows pouring into the country to bet on an ongoing yuan rally have also supplied liquidity to the market.
Banks must adjust their reserve balances with the central bank on the 5th, 15th and 25th day of each month in order to meet regulatory requirements, which usually puts upward pressure on money rates as banks sequester cash, but there was no sign of any tightness on Wednesday.
Follow our WhatsApp channel