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China's money rates mixed ahead of holiday period
September 17, 2012 / 5:43 AM / 5 years ago

China's money rates mixed ahead of holiday period

* 7-day repo rate falls 12 bps to 3.2408 pct
    * Dealers report that demand focused on 1-, 14-day repos
    * 14-day repo rate jumps over 20 bps
    * Markets closed from Sept. 30 to Oct. 7 for holidays

    By Chen Yixin and Pete Sweeney
    SHANGHAI, Sept 17 (Reuters) - China's money rates were mixed
on Monday, with the key seven-day repo posting a slight fall
while the 14-day repo rate moved upward due to rising demand for
cash to hold banks over through a forthoming week-long holiday
period, dealers said.
    The 14-day repo rate, a contract which would
actually mature in early October given that markets will be
closed for the first week in October, jumped 21.17 basis points
to 3.4717 percent, up from 3.2600 percent.
    "Funds in the market are quite stable today, and demand is
still focused on 1- and 14-day repos," said a dealer at a city
commercial bank in Shanghai. 
    Dealers said they expect rates to rise further in the coming
two weeks as banks stockpile cash to meet regulatory ratio
assessments and to satisfy demand during the holiday period.
    Markets will be closed from September 30 to October 7 for
the Mid-Autumn Festival and the National Day holiday.
    China's central bank issued 28-day reverse bond repurchase
agreements last week for the first time since it started regular
open market operations in 2003, signaling regulators'
determination to stick to using short-term tools to manage
liquidity rather than interest rates or banks' reserve
requirements.
    The central bank surveyed commercial banks about their
demand for seven-day and 28-day bond repurchase agreements on
Tuesday, but once again refrained from surveying demand for
14-day instruments, just as it did last week. 
    The benchmark weighted-average seven-day bond repurchase
rate fell 12.08 basis points to 3.2408 percent
from 3.3616 percent at the close on Friday, and the shortest
overnight one-day repo rate rose to 2.7308 percent
from 2.6795 percent.
    
                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         3.2408     3.3616    - 12.08
7-day SHIBOR           3.2433     3.3633    - 12.00  
 Note: Repo rate is weighted average.
     


 (Editing by Simon Cameron-Moore)

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