China's central bank - the People's Bank of China (PBOC) sold Tuesday 50 billion yuan of 7-day reverse repos to maintain the money market fluidity.
In July, it pumped in net 55 billion yuan liquidity flows into money market, up notably over June, which, together with the suspension of initial public offerings (IPO) on the Shanghai and Shenzhen stock markets, helped drive capital flow back to the money market.
As a result, interbank borrowing costs dropped in line over June, with 7-day, 14-day and 21-day pledged bond repo rates down 33 basis pints (bp), 49 bps and 95 bps to 2.47 percent, 2.73 percent and 2.7 percent, respectively, by end July.
In August, local money market was likely to remain fluid given the very likely IPO halt and lingering economic growth risks, predicted Xu Hanfei, a bond researcher of Guotai Junan Securities.
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