August 5, 2013 / 5:58 AM / 4 years ago

China money rates mixed as traders eye payment deadline

* Key 7-day money rate up 3 bps to 4.36 pct
    * Market cautiously track regular RRR payment
    * Stable money rate seen after PBOC issued 3-month bills

    By Chen Yixin and Pete Sweeney
    SHANGHAI, Aug 5 (Reuters) - China's money rates were mixed
on Monday, with dealers saying that banks needing to pay into
escrow accounts to meet reserve requirement ratios (RRR)
mandated by regulators put a floor under the market. 
    "Money is not as ample as it was last week, but we still can
meet our needs," said a dealer at a state-owned bank in Beijing.
     The benchmark weighted-average seven-day bond repurchase
rate stood at 4.36 percent near midday, up 3 basis
points from the previous close of 4.33 percent.
    The overnight rate fell slightly by 11 basis
points (bps) to 3.11 percent, while the 14-day tenor
 slumped 25 bps to 4.35 percent from its close of
4.60 percent on Friday.
    Dealers said they see little chance for any sharp moves in
money rates in the near future given that the People's Bank of
China appears to be adjusting the money supply behind the scenes
to keep rates stable.
    The PBOC's quarterly monetary policy report published Friday
evening showed it reissued 183.8 billion yuan ($29.99 billion)
worth of three-year bills in July, showing that while the bank
was publicly injecting short-term funds, it quietly mopped up
excess liquidity to maintain rate stability. 
    Banks must adjust their reserve balances with the central
bank on the 5th, 15th and 25th day of each month in order to
meet the RRR requirement, with the amount of the payment or
refund dependent on changes in their customer deposit balances.
    
                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         4.3591     4.3347     +2.44
7-day SHIBOR           4.3560     4.3140     +4.20
 Note: Repo rate is weighted average.

    
        >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
    
    MARKET DRIVERS
    - CHINA MONEY-Tighter interbank regulation seen after cash
squeeze 
    - Collapse in China bond volumes exposes market's seamy side
 
    - China reform push means June turmoil may be just the
beginning 
    
    DATA POINTS
    - External liquidity tracker: Collapse in FX purchases 
hurts liquidity in May link.reuters.com/pem75t
    - Impact of maturing central bank bills and repos GRAPHIC: link.reuters.com/pem75t
    - Chinese government bond curve flattens on liquidity
squeeze, growth concerns GRAPHIC: link.reuters.com/jyr95t
    - China's interest-rate swap curve is inverted on severe
liquidity squeeze GRAPHIC: link.reuters.com/ryr95t
    - China corporate bond spreads have narrowed slightly 
GRAPHIC: link.reuters.com/bas95t
    - Hot money tracker: Hot money inflows have returned in
2013, boosting liquidity GRAPHIC: link.reuters.com/saz74t
    
    
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 (Editing by Shri Navaratnam)

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