(Adds SHIBOR rates and details, updates closing prices)
SHANGHAI, June 9 China's primary money rates
edged lower for the week after the central bank injected fresh
funds through medium-term loans, but traders said they still
expected pressure on liquidity from seasonal factors including
coming tax payments.
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, closed at
2.9136 percent on Friday, more than eight basis points lower
than the previous week's closing average rate at 2.9981
Traders said there were few signs of liquidity stress this
week after central bank injections, though market expectations
for tightening cash conditions towards the end of June have
driven interest rates for longer-term loans higher.
The Shanghai Interbank Offered Rate (SHIBOR) for one-month
tenor stood at 4.5854 percent on Friday, its
highest level since April 2015. The three-month rate
also rose to a more than two-year high.
The one-year SHIBOR rate, which was lower than
China's benchmark one-year lending rate until late May, has
continued to rise and climbed to 4.4116 percent on Friday, its
highest since May 2015. The one-year benchmark was
A Shanghai-based trader at a Chinese bank said monthly
payments of a regulatory tax will begin next week, while the
central bank's quarterly Macro Prudential Assessment (MPA) will
tighten liquidity further.
June traditionally has tight liquidity. In 2013, a China
cash crunch that spooked global markets occurred in late June.
The People's Bank of China injected 498 billion yuan ($73.27
billion) into the financial system through its medium-term
lending facility (MLF) loans on Tuesday, more than offsetting
the amount of maturing loans this month.
Three batches of earlier MLF loans totaling 431.3 billion
yuan are due to mature in June, according to Reuters
calculations based on official data from the central bank.
Market players did not expect the central bank to renew a
batch of maturing six-month MLF loans with a value of 207
billion yuan next Friday, but anticipated the PBOC would raise
its interest rates soon, with expectations that the U.S. Federal
Reserve interest rate hike next week.
In March, after the U.S. Fed raised interest rates, the PBOC
lifted short-term interest rates in what economists said was a
bid to stave off capital outflows and keep the yuan stable.
The central bank has injected 974.2 billion yuan on a net
basis through the MLF loans so far this year, compared with a
net drain of 775 billion yuan via open market operations during
the same period, according to Reuters calculations based on the
official data from the PBOC.
Nearly 200 billion yuan of accumulated net cash injection
with longer maturity into the country's financial system this
year clearly showed that the authorities have been walking a
tightrope between maintaining overall liquidity in the market,
while deleveraging and reducing risks without hurting the real
In the open market operations, the PBOC drained a net 10
billion yuan from the money market this week, compared with a
net injection of 30 billion yuan a week earlier.
Key money rates at a glance:
Volume-wei Previous Change (bps) Volume
ghted day (%)
Interbank repo market
Overnight 2.8315 2.8294 +0.21 20,455.96
Seven-day 2.9136 3.0011 -8.75 3,040.69
14-day 3.9081 3.9743 -6.62 430.81
Shanghai stock exchange repo market
Overnight 2.7200 2.8250 -10.50 909,391.5
Seven-day<CN7DR 3.3400 3.4000 -6.00 59,364.10
14-day 3.5100 3.7050 -19.50 7,114.00
PBOC Guidance Rates
Overnight 2.8500 2.8200 +3.00
Seven-day 3.4000 3.6000 -20.00
14-day 3.9200 4.0000 -8.00
SHANGHAI INTERBANK OFFERED RATE
Overnight 2.8275 2.8199 +0.76
Seven-day 2.8949 2.8939 +0.10
Three-month 4.7555 4.7306 +2.49
KEY INTEREST RATE SWAPS:
Instrument RIC Rate Spread vs 1 yr
2 yr IRS based on 1 CNABAD2YF= 0.0000 -1.5
5 yr 7-day repo swap CNYQB7R5Y= 3.7900 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:
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:
($1 = 6.7969 Chinese yuan)
(Reporting by Winni Zhou and John Ruwitch; Editing by Simon
Cameron-Moore and Richard Borsuk)