China�s key money rate rises in balanced liquidity

SHANGHAI, Aug 10: China�s key money rate rose slightly on Friday on expectations that the People�s Bank of China (PBOC) will continue to use reverse repos to balance market liquidity.The benchmark seven-day repo rate was at 3.3041 percent at midday, inching up from 3.2927 at Thursday�s close, while the overnight rate rose 6.36 basis points to 2.6681� percent.The 14-day rate fell 9.23 bps to 3.2478 percent from 3.3401 percent on Thursday.�Now the PBOC is just using reverse repos to balance market levels, and no other funds have moved into the market, so the money rates have not moved sharply recently,� said a dealer at a Chinese bank in Beijing.Dealers said that the reverse repo rates have been tracking the benchmark rate for ordinary seven day repos.China�s central bank injected 50 billion yuan into the money markets through seven-day reverse bond repurchase agreements at a yield of 3.35 percent on Thursday.Market players widely expect the central bank to cut banks� reserve requirement ratio (RRR) in August.However, some dealers said the PBOC might wait until September in order to head off the traditional quarter-end funding squeeze as banks stockpile cash on expectations of heavier customer withdrawals and to meet required regulatory thresholds.Current� Prev close�� Change(pct) (bps)�� 7-day repo����������������������� 3.3041�� 3.2927+1.14 7-day SHIBOR��������������������� 3.3000�� 3.60991.17 Note: Repo rate is weighted average.($1 = 6.3615 Chinese yuan)(agencies)