BEIJING: The People’s Bank of China (PBC) was said to have added money to the banking system yesterday as a cash shortage stemming from new share sales drove the benchmark money-market rate up by the most since July.
The monetary authority supplied funds on a short-term basis, according to two people with direct knowledge of the matter.
Some 50 billion yuan (RM27 billion) was offered using Short-term Liquidity Operations, Market News International reported earlier.
Eleven companies are due to sell shares for the first time next week and Australia & New Zealand Banking Group Ltd estimates the sales will lock up at least one trillion yuan.
“PBC clearly has the capacity to bring down money-market rates,” said Suan Teck Kin, an economist at United Overseas Bank Ltd in Singapore. “But right now, I don’t see the short-term rates coming off significantly as demand for cash is strong in relation to IPOs (initial public offerings).”
The seven-day repurchase rate, a gauge of cash availability in the banking system, rose as much as 322 basis points, or 3.22 percentage point, to 6.50 per cent, data from the National Interbank Funding Centre show. That’s the biggest intra-day jump in eight months. A weighted average rate extended gains after PBC injected cash, climbing 37 basis points to 3.66 per cent in Shanghai, the highest close since August. Bloomberg