Well, that didn’t take long. From Bloomie:
The People’s Bank of China conducted 48 billion yuan ($7.9 billion) of 14-day repurchase contracts at 3.8 percent today, according to a statement posted on its website. The monetary authority last issued such contracts on June 6, when it sold 10 billion yuan of 28-day repos. Today’s rate is higher than both the 2.75 percent in the June auction and the 2.05 percent when the PBOC last issued 14-day repos in January 2011.
The seven-day repurchase rate, a gauge of funding availability in the banking system, fell eight basis points to 3.76 percent as of 5:02 p.m. inShanghai, according to a weighted average by the National Interbank Funding Center. It touched 3.71 percent, the lowest since Nov. 13. The overnight rate dropped as much as 24 basis points to 2.63 percent, the lowest since May.
…One-year interest-rate swaps based on the floating seven-day repo rate were unchanged at 4.84 percent, after climbing as much as four basis points, based on data compiled by Bloomberg.
…Conducting repos is “a hawkish move highlighting the central bank’s determination to tighten monetary policy via liquidity tools,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. The move indicates that “policy makers are uncomfortable with the recent decline in money-market rates and with the explosive growth of bank lending and other forms of social financing in January,” he said.
True, but it must be noted that this is a move to prevent interbank markets getting too cheap, not making them more expensive, after the cash drains of Lunar New Year drove prices higher.
