Bloomberg News

China PBOC to Add Funds Via Reverse Repo Tomorrow, Traders Say

January 16, 2012

Jan. 16 (Bloomberg) -- China’s central bank will inject funds into the financial market this week to ease a cash crunch ahead of next week’s holidays, according to traders at finance companies that participate in the government’s debt auctions.

The People’s Bank of China gauged demand for cash from domestic banks today and will add funds through 14-day reverse repurchase operations tomorrow and on Jan. 19, according to two traders who declined to be identified because the information isn’t public. The nation’s financial markets are closed for a week starting on Jan. 23 for the Chinese New Year holiday.

The seven-day repurchase rate, a gauge of funding availability in the financial system, jumped 86 basis points, or 0.86 percentage point, to 5.76 percent as of 11:53 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. That was the highest level this year.

The PBOC published a list of 50 primary dealers allowed to participate in open-market operations in February 2011, including Industrial & Commercial Bank of China Ltd., Agricultural Bank of China Ltd., Bank of China Ltd., China Construction Bank Corp., China Citic Bank Corp., Industrial Bank Co. and Postal Savings Bank of China.

--Editors: Anil Varma, Simon Harvey

To contact Bloomberg News staff for this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net; Karen Yeung in Shanghai at kyeung29@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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