September 22, 2017 / 9:37 AM / 10 months ago

China money rates edge up as quarter's end approaches

    SHANGHAI, Sept 22 (Reuters) - China's primary money rates
rose slightly this week as demand for cash rose near the end of
the quarter and before a week-long holiday that begins Oct. 1,
but net fund injections kept liquidity relatively ample.
    The volume-weighted average rate of the benchmark seven-day
repo traded in the interbank market, considered
the best indicator of general liquidity in China, was 2.9533
percent on Friday afternoon, up 8 basis points from the previous
week's closing average of 2.8724 percent.
    The Shanghai Interbank Offered Rate (SHIBOR) for the same
tenor was at 2.8580 percent, up about 3 basis points from a week
    Traders described cash conditions as beginning the week
relatively tight, but ending more relaxed. As the third quarter
draws to a close, corporate tax payments have put some pressure
on overall liquidity.
    "Cash conditions have slowly improved every day this week.
In the first half of the week, (open market operation)
injections were very large, which led to some improvement, but
prices were still high. Today conditions are more relaxed," said
a trader at a regional bank in Shanghai.
    A downgrade of China's long-term sovereign credit rating by
S&P Global Ratings late on Thursday had minimal
impact on the market, traders said.
    The People's Bank of China (PBOC) injected a net 450 billion
yuan through reverse bond repurchase agreements this week,
following a net 260 billion yuan injection last week..
A 300 billion yuan injection on Monday was the largest for a day
since July 24.
    Market watchers said that conditions next week would likely
remain relatively loose, though non-bank financial institutions
may suffer as banks withhold money ahead of the quarter's end.
    The one-day or overnight rate stood at 2.7482 percent Friday
and the 14-day repo stood at 3.9982 percent.

 Key money rates at a glance:
                  Volume-wei  Previous    Change (bps)               Volume
                  ghted       day (%)                                
                  rate (%)                                           
 Interbank repo market
 Overnight        2.7482      2.8269      -7.87                      0.00
 Seven-day        2.9533      2.9421      +1.12                      0.00
 14-day           3.9982      4.0596      -6.14                      0.00
 Shanghai stock exchange repo market
 Overnight        3.2000      4.8650      -166.50                    784,520.0
 Seven-day<CN7DR  4.9700      4.9000      +7.00                      48,053.70
 14-day           4.8100      4.9600      -15.00                     26,143.20
 PBOC Guidance Rates
 Overnight        2.7700      2.8500      -8.00                      
 Seven-day        3.4400      3.4400      +0.00                      
 14-day           3.9000      3.9500      -5.00                      
 Overnight        2.7560      2.8057      -4.97                      
 Seven-day        2.8580      2.8690      -1.10                      
 Three-month      4.3611      4.3675      -0.64                      
 Instrument            RIC         Rate          Spread vs 1 yr
                                                 official deposit
 2 yr IRS based on 1   CNABAD2YF=        0.0000              -1.5
 year benchmark                                  
 5 yr 7-day repo swap  CNYQB7R5Y=        3.7300               n/a
*This spread can be seen as a proxy for forward-looking market
expectations of an interest rate cut or rise
China FX and money market guide: 
 China debt market guide:
 SHIBOR rates:
 Reports on central bank open market operations:
 New Chinese debt issues:
 Prices for central bank bills, treasury bonds and sovereign
 Overview of China financial market data:

 (Reporting by Andrew Galbraith; Editing by Richard Borsuk)
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