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China's 1-day money rate hits 7-mth low, 14-day up on money demand
January 22, 2013 / 5:59 AM / 5 years ago

China's 1-day money rate hits 7-mth low, 14-day up on money demand

* One-day repo rate falls to 1.92 bps, lowest since early
    * 14-day repo rise as suspends 14-day reverse repo
    * conduct net drain of 67 bln yuan on Tuesday

    By Chen Yixin and Pete Sweeney
    SHANGHAI, Jan 22 (Reuters) - China's one-day money rates
fell to their lowest in more than seven months on Tuesday as
market liquidity remained ample, but dealers cited rising demand
for funds after the central bank declined to issue 14-day
reverse repos during open market operations in the morning.
    The weighted-average one-day bond repurchase rate
 fell 1 basis point to 1.93 percent from 1.94
percent on Monday, the lowest level since early June.
    "I have not seen the one-day rate fall below 2 percent for a
very long time," said a dealer at a mid-sized Chinese bank in
    "That means money market conditions are extremely relaxed."
    The benchmark weighted-average seven-day repo 
rose to 2.98 percent from 2.94 percent at the close, and the
14-day repo rate rose to 2.92 percent from 2.80
    Dealers said the rise in 14-day repo rates was due to the
central bank's abstention from issuing such tenors on Tuesday,
which forced some institutions which were hopping to borrow
money in that tenor to shop in the interbank market.
    China's central bank injected 43 billion yuan ($6.91
billion) into the money markets through 7-day reverse bond
repurchase agreements on Tuesday, but 110 billion worth of
previously issued reverse repos matured, draining funds. So far
the PBOC has conducted a net drain of 67 billion yuan for the
                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         2.9826     2.9364    + 4.62
7-day SHIBOR           2.9940     2.9910    + 0.30  
 Note: Repo rate is weighted average.
($1 = 6.22 Chinese yuan)

 (Editing by Kim Coghill)

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