SHANGHAI, Jan 30: China’s money rates rose on Wednesday, as dealers reported strong demand for loans that extend across the coming holiday period.
‘Money conditions are good and (liquidity) remains relatively ample, but holiday demand is still strong. City commercial and joint-stock banks need to borrow money,’ said a dealer at a state-owned bank in Beijing.
Dealers observed especially strong demand for 21-day funding, which would extend through both the Lunar New Year holiday and the next two reserve requirement adjustment periods.
The weighted-average 21-day bond repurchase rate hit 4.07 percent, the highest level since Jan 4, with dealers reporting heavy volume of about 60 billion yuan ($9.65 billion) through midday.
The interbank market will be closed from Feb. 9 to 15 for the Spring Festival holidays.
The benchmark seven-day bond repo rate rose to 3.23 percent on Wednesday, up from its highest level since Jan 4 and up from 3.11 percent on Tuesday.
Month-end cash demand has now driven the rate up by 55 basis points since hitting a six-week low of 2.68 percent last Friday.
Market players expected the 7-day rate could rise around 3.35 percent, which is the rate of central bank’s seven-day reverse repo.
In its latest weekly report on domestic interest rates, China International Capital Corporation said that while money conditions will tighten ahead of the holiday, the cash crunch will be less severe than last year due to rising foreign exchange purchases in January. Such purchases inject yuan liquidity into the interbank market. (agencies)
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