China money rates rise on expectation of tighter liquidity moves

SHANGHAI, Feb 25: China’s money rates rose across the board on Monday after the People’s Bank of China signalled that it would drain more funds from the market via its open market operations on Tuesday, traders said.
The central bank drained a weekly record 910 billion yuan ($146 billion) from the money market last week in a move widely interpreted as aimed at offsetting excess funds in the market after the lunar new year holiday.
On Monday, the PBOC again surveyed primary dealers for their demand for regular bond repurchase agreements on Tuesday, indicating that it would continue to soak up cash from the market, traders said. Repurchase of bonds drains money from the market while reverse repos inject funds.
Some suspect that regulators might want to lift funding costs to send a signal to the market amid renewed government warnings about rising home prices, traders said.
The weighted-average seven-day bond repurchase rate rose to 3.29 percent near midday, up 19 basis points over Friday, the fifth straight day that the benchmark money market rate has risen.
The overnight repo rate rose to 2.40 percent from Friday’s 2.21 percent and the 14-day repo rate jumped to 3.34 percent to 3.00 percent.


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