SHANGHAI, May 7: China’s money rates extended their declines on Tuesday as market participants were confident that the central bank would conduct a net injection this week.
China’s central bank drained 55 billion yuan ($8.92 billion)from the money markets through 28-day bond repurchase agreements on Tuesday. When taken in combination with previously issued instruments that mature on Tuesday, injecting funds, the central bank injected a net 85 billion yuan on Tuesday.
‘The demand for repos is not strong, with only a few big banks in the market for them, so I don’t think the central bank will issue more than 100 billion yuan worth of forward repos during Thursday’s open market operations,’ said a dealer at a Chinese bank in Shanghai.
Given total maturing instruments of 186 billion yuan this week, the dealer’s estimate implies a net weekly injection of at least 31 billion yuan.
The unofficial benchmark weighted-average seven-day bond repurchase rate edged down 2 bps to 3.18 percent from 3.20 percent.
The overnight repo rate slumped 43 bps to 2.36 percent by midday, from 2.79 percent on Monday, while the 14-day repo rate gained 9 bps to 3.15 percent from 3.07 percent. (AGENCIES)
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