SHANGHAI, Aug 26: China’s money rates fell slightly on Monday as most banks decided they had enough funds to meet regular month-end cash demand without additional borrowing, traders said.
The weighted-average overnight bond repurchase rate dropped 23 basis points (bps) to 3.05 percent.
The 14-day repo rate fell slightly by 4 bps to 5.18 percent around midday, while the benchmark seven-day repo rate dropped 13 bps to 4.05 percent.
‘Banks are not short on money and the overnight money supply is quite ample,’ said a dealer at an Asian bank in Shanghai.
‘But I cannot see myself lending much today given most of us are cautious and will not dare to lend too much money until the month-end passes.’
Dealers and investors remain nervous in the aftermath of a credit crunch in late June that saw the overnight rate quoted as high as 30 percent on one day. Rates have declined since but uncertainty over the central bank’s intentions endures.
Dealers said the supply of liquidity in the market is gradually improving on expectations that the central bank will inject more funds via open market operations this week.
Additional funds are expected to be supplied by an injection from finance ministry deposits to be auctioned next week.
China’s finance ministry will auction 50 billion yuan ($8.2 billion) of three-month deposits to commercial banks on Aug. 27, the ministry said on Thursday. (AGENCIES)
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