Bloomberg News

Citigroup’s Perret-Green Says China Repo Rate May Fall Below 2%

July 05, 2012

Patrick Perret-Green, Singapore-based head of Asia foreign-exchange and rates strategy at Citigroup Inc. (C:US), comments on China’s second interest-rate cut within a month, in a report published today.

“Clearly, the government is concerned about growth and the 30 percent allowable discount is very aggressive. It was previously 20 percent.

‘‘Theoretically, a bank could lend at 4.2 percent now. So, in theory, from where we were just a few weeks ago, the price of a one-year loan has fallen 240 basis points. This is likely to push the seven-day repo below 2 percent, to where it was before the tightening cycle began.’’

To contact the reporter on this story: Fion Li in Hong Kong at fli59@bloomberg.net

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


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