China's money rates steady as regulators inject funds

Tue Nov 13, 2012 12:25am EST

Related Topics

* PBOC injects 186 billion yuan via reverse repos
    * Ministry of Finance injects 50 bln yuan via deposits
    * Maturing reverse repos drain 224 billion yuan
    * 7-day repo rate edges up 6.49 bps, still at low level

    By Lu Jianxin and Pete Sweeney
    SHANGHAI, Nov 13 (Reuters) - China's money rates were steady
on Tuesday after the central bank and the Ministry of Finance
injected money into the   market to keep adequate liquidity in
the banking system.
    The benchmark weighted-average seven-day bond repurchase
rate edged up 6.49 basis points to 3.1651 percent
by midday from Monday's three-week low close of 3.1002 percent.
    The 14-day repo rate was almost unchanged at 
3.3303 percent from 3.3336 percent, but the one-day repo rate
 dropped to 2.3288 percent from 2.5254 percent.
    "Market liquidity conditions remain good and are set to
maintain this in coming weeks," said a dealer at a major
state-owned bank in Beijing.
    "The seven-day repo rate is likely to move to around 3
percent while it also has the potential to fall below that level
briefly from time to time."
    The People's Bank of China (PBOC) injected a total of 186
billion yuan ($30 billion) into the money markets through
reverse bond repurchase agreements on Tuesday. 
    In addition, the Ministry of Finance injected another 50
billion yuan into the banking system via an auction of six-month
deposits to commercial banks. 
    That meant that although 224 billion yuan of PBOC reverse
repos are set to mature on Tuesday, which will drain funds,
regulators will have injected a net 12 billion yuan into the
market, adding to already ample liquidity. 
    "Liquidity is expected to remain generally loose until the
second half of this year when banks will start preparing money
for cash calls around the year-end," said a trader at a Chinese
securities house in Shanghai.
    "There will be a trend for institutions to borrow
longer-term money, for instance at one-month tenor, in coming
weeks."
    China's main interest rate swaps (IRS) all slipped one basis
point by midday, with few players expecting changes to monetary
policy in the near term, traders said.
    The benchmark five-year IRS stood at 3.36
percent by midday, 10-year IRS at 3.41 percent and
one-year IRS at 3.14 percent.
    
                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         3.1651     3.1002    + 6.49
7-day SHIBOR           3.1505     3.0825    + 6.80
 Note: Repo rate is weighted average.
     
($1 = 6.2262 Chinese yuan)

 (Editing by Eric Meijer)
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