China’s benchmark money-market rate fell the most in three weeks on speculation the central bank will ensure an ample cash supply to help meet demand for banks’ month-end requirements and new share sales.
The People’s Bank of China capped the amount drained via repurchase agreements at 10 billion yuan ($1.6 billion) today, compared with 65 billion yuan of such contracts maturing this week. The PBOC added a net 11 billion yuan in the period ended Aug. 22 by selling fewer repo contracts than those due. Equity offerings may attract 900 billion yuan in subscriptions in the five days through Aug. 29, Shanghai Securities News reported Aug. 22, citing estimates by Shenyin Wanguo Securities Co.
“It’s very likely the PBOC will maintain a net injection this week, given month-end cash demand and new share sales,” said Lin Yijian, a fixed-income analyst at Guangzhou Rural Commercial Bank Co. in the southern province of Guangdong. “Still, the central bank’s open-market operations look rather neutral, and don’t represent a shift into loosening.”
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