China money rates push higher, looser money seen in 2012
Saturday, 31 December 2011
SHANGHAI, Dec 30 (Reuters): Short-term lending rates pushed higher in the heaviest trading day of the year on Friday as banks scrambled to secure funds for the holiday weekend, when customer demand for cash is traditionally strong.
The benchmark weighted-average seven-day bond repurchase rate swelled by 21 basis points to 5.6011 per cent at midday, a five-month high.
Trading volume on seven-day repos surpassed 150 billion yuan ($23.7 billion) before midday, making Friday the heaviest trading day of the year before the session was half over.
Thursday's volume of 128 billion yuan was the second-highest of the year, surpassed only by June 30, when banks were
similarly pressed to secure funds to meet the central bank's required reserve ratio (RRR), which had just taken effect.
"Prices are still reflecting year-end factors, so they rose again, but it seems most people are not lacking for funds," said a trader at a foreign bank in Shanghai.
The 14-day repo rose 35 bps to 6.0397 per cent, also a five-month high.
In addition to year-end cash demand, banks are also under pressure to build up central bank reserves in advance of the Jan. 5 RRR deadline.
But the overnight repo, which reflects funds on hand on a given day, rather than expectations for future conditions, edged down by 1 bp to 3.41 at midday, providing further evidence that liquidity is ample.
The year-end squeeze this year appears less severe than 2010, when the seven-day rate reached 6.3679 per cent on Dec. 30. on volume of 142 billion yuan, also one of the heaviest trading days of the year.
The benchmark weighted-average seven-day bond repurchase rate swelled by 21 basis points to 5.6011 per cent at midday, a five-month high.
Trading volume on seven-day repos surpassed 150 billion yuan ($23.7 billion) before midday, making Friday the heaviest trading day of the year before the session was half over.
Thursday's volume of 128 billion yuan was the second-highest of the year, surpassed only by June 30, when banks were
similarly pressed to secure funds to meet the central bank's required reserve ratio (RRR), which had just taken effect.
"Prices are still reflecting year-end factors, so they rose again, but it seems most people are not lacking for funds," said a trader at a foreign bank in Shanghai.
The 14-day repo rose 35 bps to 6.0397 per cent, also a five-month high.
In addition to year-end cash demand, banks are also under pressure to build up central bank reserves in advance of the Jan. 5 RRR deadline.
But the overnight repo, which reflects funds on hand on a given day, rather than expectations for future conditions, edged down by 1 bp to 3.41 at midday, providing further evidence that liquidity is ample.
The year-end squeeze this year appears less severe than 2010, when the seven-day rate reached 6.3679 per cent on Dec. 30. on volume of 142 billion yuan, also one of the heaviest trading days of the year.