PBOC pulls $129b in big­gest weekly with­drawal since 2013

The Pak Banker - - FRONT PAGE -

BEI­JING: China's cen­tral bank drained the most funds from the fi­nan­cial sys­tem in three years, mop­ping up ex­cess cash af­ter a re­serve-re­quire­ment ra­tio cut ear­lier this week boosted liq­uid­ity. The Peo­ple's Bank of China (PBOC) pulled a net 840 bil­lion yuan ($129 bil­lion) in the five days through Fri­day, data com­piled by Bloomberg show. While that was the big­gest weekly with­drawal since Fe­bru­ary 2013, money-mar­ket rates barely re­acted with the RRR re­duc­tion re­leas­ing an es­ti­mated 685 bil­lion yuan into the bank­ing sys­tem. The PBOC kept its open-mar­ket seven-day in­ter­est rate un­changed at 2.25 per­cent on Fri­day.

The seven-day re­pur­chase rate, a bench­mark gauge of in­ter­bank fund­ing avail­abil­ity, was lit­tle changed Fri­day and fell three ba­sis points for the week to 2.27 per­cent as of 4:30 p.m. in Shang­hai, ac­cord­ing to a weighted av­er­age from the Na­tional In­ter­bank Fund­ing Cen­ter. The cost of one-year in­ter­est-rate swaps, the fixed pay­ment to re­ceive the float­ing seven-day repo rate, was lit­tle changed at 2.3 per­cent.

"The PBOC didn't seem to plan to add ex­ces­sive liq­uid­ity," said Qu Qing, a Bei­jing-based an­a­lyst at Huachuang Se­cu­ri­ties Co. "Keep­ing the in­ter­est rate of the op­er­a­tions un­changed also in­di­cated its in­ten­tion to main­tain pru­dent mon­e­tary pol­icy. The RRR cut is only re­plac­ing the huge amount of re­verse re­pos due this week."

The cen­tral bank auc­tioned 50 bil­lion yuan of seven-day re­verse re­pos on Fri­day, bring­ing this week's to­tal sales to 320 bil­lion yuan. That's less than a record 1.16 tril­lion yuan of con­tracts ma­tur­ing this week that will drain funds from the fi­nan­cial sys­tem, data com­piled by Bloomberg show. The PBOC in­jected an un­prece­dented 1.7 tril­lion yuan via such op­er­a­tions in the five weeks run­ning up to the Lu­nar New Year hol­i­days. The yield on govern­ment notes due Jan­uary 2026 rose four ba­sis points from a week ago and was un­changed at 2.92 per­cent, Na­tional In­ter­bank Fund­ing Cen­ter prices show.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.