Arab Today, arab today china cb suspends bill sales on liquidity squeeze
Last Updated : GMT 22:59:13
Arab Today, arab today
Arab Today, arab today

China CB suspends bill sales on liquidity squeeze

Arab Today, arab today

Arab Today, arab today China CB suspends bill sales on liquidity squeeze

Shanghai - Arabstoday

China’s central bank (CB) auctioned no new bills or bond repurchase agreements this week, a sign that it remains sensitive to the liquidity squeeze still roiling the interbank market, despite the cut in the required reserve ratio (RRR) announced last weekend. The move highlights the unfamiliar situation facing the People’s Bank of China (PBOC) this year as it tries to support bank lending in the face of slowing growth. For most of the last decade, the main challenge was how to absorb the massive excess liquidity created by large foreign exchange inflows. Now, with China’s trade surplus narrowing, such inflows are slowing. “Going forward, we really need to rely more on RRR cuts to provide liquidity. Otherwise, I would expect money market rates to remain relatively high,” said Frances Cheung of Credit Agricole. The People’s Bank of China, which is the central bank of the People’s Republic of China with the power to control monetary policy and regulate financial institutions in mainland China. PBOC has announced a required reserve ratio cut on Saturday night. Chinese equities and global commodities have rallied this week in response to the move, but interbank rates have stayed stubbornly high this week. The required reserve ratio cut does not take effect until on Friday, so it is too early to judge the impact. Still, the seven-day bond repurchase rate - a benchmark indicator of Chinese banks’ willingness to lend to each other - was at 5.5004 per cent at mid-afternoon on Thursday, down only 19.26 basis points since its last close before the required reserve ratio announcement. A seven-day rate below 3.5 per cent indicates easy conditions. The high seven-day rate on Thursday comes despite the fact that a seven-day repo loan extended on Thursday would fall mostly into the period after the required reserve ratio cut takes effect. The People’s Bank of China will be watching the market closely next week. If money market rates stay high, it could affect banks’ ability to support the economy through lending. New loans in January were far below market expectations. Though the Lunar New Year was a contributing factor, some analysts have blamed tight liquidity, which may have prompted banks to offer higher lending rates than potential borrowers were willing to accept. Cheung expects that rates may fall between 50 to 100 basis points.  But some dealers say they expect the seven-day rate to remain above 5 per cent. In another indication of the funding squeeze affecting some banks, an auction for six-month finance ministry deposits on Thursday morning yielded an interest rate of 6.8 per cent, nearly twice as high as the benchmark one-year deposit rate of 3.5 per cent for corporate and household deposits. “The pressure on banks to attract deposits is pretty heavy because of the loan-to-deposit ratio,” said a dealer at a foreign bank in Shanghai. The halt in bill and repo sales means that maturing bills will add a net 2 billion yuan ($317.66 million) into the banking system this week. Last week, the People’s Bank of China conducted a net drain of 9 billion yuan from the market through publicly announced open market operations.

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today china cb suspends bill sales on liquidity squeeze Arab Today, arab today china cb suspends bill sales on liquidity squeeze

 



Arab Today, arab today
Arab Today, arab today Ideen Belmahdy happy to be part of “ Fashion Star”

GMT 17:00 2017 Sunday ,26 February

Ideen Belmahdy happy to be part of “ Fashion Star”
Arab Today, arab today Tourist guide explains types of tourism

GMT 18:28 2017 Saturday ,25 February

Tourist guide explains types of tourism
Arab Today, arab today Expresses Algerian history by woody figures

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures
Arab Today, arab today Iran complying with nuclear deal

GMT 07:14 2017 Saturday ,25 February

Iran complying with nuclear deal
Arab Today, arab today Ayat Abaza says state TV presented major stars

GMT 03:52 2017 Sunday ,26 February

Ayat Abaza says state TV presented major stars
View News in Arabic - Business: مصارف
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Reading therapy relieves mental disorders

GMT 15:39 2017 Friday ,24 February

Reading therapy relieves mental disorders
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Penguins in the age of dinos

GMT 11:44 2017 Saturday ,25 February

Penguins in the age of dinos
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today 'Constructive' Vauxhall talk with union

GMT 08:54 2017 Saturday ,25 February

'Constructive' Vauxhall talk with union
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Ola Ghanem hopes to work with M.Ramadan

GMT 07:23 2017 Friday ,24 February

Ola Ghanem hopes to work with M.Ramadan
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage

GMT 06:08 2017 Thursday ,23 February

Actress Lobna Abdel Aziz proud of her career

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 13:47 2017 Friday ,24 February

Rabia Fatima reveals role of "Facebook" in her career

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 20:33 2017 Friday ,17 February

To release new antiques collection

GMT 10:20 2017 Thursday ,23 February

Brazil's top diplomat resigns

GMT 11:54 2017 Thursday ,23 February

Saudis await visitors but will they come?

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday