SHANGHAI Jan 22 China's benchmark money rate
slid on Wednesday morning after a generous injection by China's
central bank the day before, as cash and better regulatory
signaling soothed sentiment, but other rates rose in a sign of
The injection was the first intervention of the year by the
People's Bank of China (PBOC), and it came after short-term
rates showed signs of spiking on Monday, risking a repetition of
the destablising cash crunches that repeatedly rattled investors
The PBOC injected 75 billion yuan ($12.40 billion) through
seven-day reverse repos during open market operations on
Tuesday, and an additional 180 billion yuan through 21-day
It also said it had injected an unspecified amount of cash
into specific banks through a standing lending facility (SLF) on
The benchmark seven-day bond repurchase agreement
weighted average stood at 5.2746 on Wednesday,
down from 5.5484 percent at Tuesday's close. The average hit a
high point of 6.5920 on Monday, with individual trades as high
as 10 percent, as banks scrambled for cash.
An auction of 10-year bonds by the Ministry of Finance on
Wednesday morning priced below market expectations.
However, rates remain in relatively elevated territory, and
other commonly traded rates rose. The average overnight repo
rate gained around 2 basis points to 3.6869
percent, and the 14-day rose more than 12 basis
points to 5.8204 percent.
China's money supply remains under pressure from multiple
directions. The major factor at hand is the upcoming Lunar New
Year holiday, which traditionally sees demand for cash spike as
depositors withdraw money for gifts, travel and dining and
financial markets close for a week. The issuance of 21-day
repos, which do not mature until markets reopen following the
holiday, helped offset this pressure.
Another, lesser factor is the impact the resumption of
initial public offerings (IPOs) has had on the market. IPOs tend
to sequester cash from the system for short periods of time
during the subscription process, and when the IPO is big enough
it can have trickle-down effects on the primary money market.
Stock markets continued to respond positively to the
injection, however, with the CSI300 Index which tracks
the largest companies in Shanghai and Shenzhen rising more than
2 percent in mid-morning trade.
($1 = 6.0505 Chinese yuan)
(Editing by Jacqueline Wong)