China's money rates slump after big c.bank support

* Injection by c.bank ends holiday liquidity worries
* C.bank injected record 662 bln yuan this week
* Benchmark 7-day repo rate slumps 56 bps to 3.53 pct
* Interest-rate swaps also fall

By Chen Yixin and Gabriel Wildau
SHANGHAI, Feb 8 (Reuters) - China's money rates slumped on
Friday following the central bank's signal through this week's
huge injection that it will use open market operations to keep
money rates stable.
Between Monday and Thursday, the People's Bank of China
(PBOC) made a net injection of 662 billion yuan ($106.23
billion) into the banking system, which according to Reuters
calculations is a record weekly amount.
"With such a big injection, there is not even any need for
short-term liquidity operations," said a dealer at a large
state-owned bank in Beijing, referring to the PBOC's recent
launch of short-term liquidity injections on top of its regular
open market operations.
"Everybody is going to go home for Spring Festival and no
one wants to borrow funds now," said another dealer at a Chinese
commercial bank in Shanghai.
The Chinese interbank market will be closed from Feb. 11-15
for the Lunar New Year holiday, but a special session will be
held the weekend on Feb. 16-17. Trading is usually very light
during such sessions, as only banks with urgent cash needs tap
the market.
On Friday, the benchmark weighted-average seven-day bond
repurchase rate dropped 56 basis points to 3.53
percent from 4.09 percent at the previous day's close.
The 14-day repo rate slumped to 3.53 percent
from 4.21 percent, and the overnight repo rate
dived to 2.57 percent from 3.65 percent.
In the bond market, interest rate swaps (IRS) also fell
Friday. One-year IRS dropped to 3.08 percent, from
Thursday's close of 3.11 percent, and the benchmark five-year
IRS dipped to 3.66 percent from 3.69 percent.

Current Prev close Change
(pct) (bps)
7-day repo 3.5283 4.0940 -56.57
7-day SHIBOR 3.5130 4.1000 -58.70
Note: Repo rate is weighted average.

($1 = 6.23 Chinese yuan)

(Editing by Richard Borsuk)