Latest News:  


PBOC repo move aims to aid credit supply, cut rates

By Wu Yiyao in Shanghai  (China Daily)

09:56, July 31, 2013

The country's central bank intervenes as benchmark interbank lending rates hit a four-week high on Tuesday. [Photo / China Daily]

The People's Bank of China injected 17 billion yuan ($2.77 billion) into money markets on Tuesday through seven-day reverse bond repurchase agreements, the first such move in five months, to ease concerns over a credit crunch that pushed benchmark interbank lending rates to four-week highs.

Analysts said that although the volume of the operation was limited, it sent a signal to money markets.

"I see the levels more as a shift in the PBOC's stance to actively manage money market conditions to avoid a re-run of the liquidity squeeze in June," Societe Generale economist Chong Wee-khoon said in a note the same day.

It was the first time that the PBOC, the central bank, had conducted open market operations since June 20. It was also the first time the bank injected funds into the money markets.

"The levels could also serve as a signal that the era of ultra-loose and easy money is over," Chong wrote.

The PBOC's moves since the liquidity squeeze in June in the open market may help alleviate market fears that the money crunch in June might be repeated at the end of July, said a trader with an Asian bank in Shanghai.

The benchmark seven-day repurchase rate spiked to 5 percent on Tuesday for a second straight session, following a jump to 4 percent on July 26. It exceeded 5 percent on Monday for the first time in four weeks.

The rate reached a record - 12.45 percent - on June 20.

Liquidity eased on Tuesday in response to the central bank's money injection. The seven-day Shanghai interbank offered rate, a gauge of the availability of cash in the banking system, fell 8.5 basis points to 4.97 percent, according to a weighted average compiled by the National Interbank Funding Center.

Amid tight funding conditions anticipated for the remainder of the year, and the country's determination to achieve its growth targets, the central bank may take some measures to ease conditions in the money market, according to Oliver Chiu, head of research and investment advisory of retail banking in the global consumer group at Citibank (China) Co Ltd.

Stocks rose on Tuesday, with the benchmark Shanghai Composite Index climbing for the first time in five days as it added 0.7 percent to close at 1,990.38. The gauge has risen 0.6 percent this month after sinking 14 percent in June.

Share prices of lenders rose on Tuesday after plunges in the past few weeks. Ping An Bank Co gained 3.1 percent, Citic Securities Co climbed 1.9 percent and Bank of China Ltd rose 2.3 percent.

A total of 85 billion yuan in central bank bills will mature this week, compared with zero last week, data compiled by Bloomberg show.

We Recommend:

Migrant workers' high incomes not that rosy

Glamorous girls highlight Hainan auto show

Top 10 profitable companies in China

Born to lead: 2nd gen of Chinese tycoons

How foreign firms deepen China’s milk headache?

Where is the end of the slump of gold price?

Cross-sea bridge to open in E China

GSK execs allegedly received sexual services

In pictures: history of China's auto industry

Email|Print|Comments(Editor:WangXin、Chen Lidan)

Leave your comment0 comments

  1. Name


Selections for you

  1. 86-year glorious history of Chinese PLA

  2. 'HK Teenager Military Summer Camp' ended

  3. Global Tiger Day marked in Jakarta

  4. Pretty showgirls backstage at Chinajoy

  5. Women drifting lifeguards team set up

  6. Nations unite to help tigers

  7. Five generations of ancient Miao jewelry

  8. Famous Buddha heads fallen by time

  9. GSK probe reveals something rotten

  10. Complaints rise over baby formula imports

Most Popular


  1. Internet: A new world for small town shoppers
  2. China's economy will continue to prosper
  3. Western countries face dilemma on Syrian conflict
  4. Reform, not incentives, to drive expansion
  5. Lenovo reigns as king of the hill
  6. Small exporters need more help to pass tough times
  7. Debate on internationalizing education
  8. Bo Xilai indicted for corruption
  9. China rules out provisional economic stimulus plan
  10. Removal of deposit rate ceiling not imminent

What’s happening in China

Factory explosion may stoke concern

  1. Illegal tour firms face crackdown
  2. Smoggy Beijing to lay more greenways
  3. Drought plagues S China as heat wave continues
  4. New urbanites face challenges in enjoying rights
  5. 38 counties in Guizhou faced with serious drought