China money rates jump to 5-month tops

China’s short-term money market rates rallied to their highest levels in nearly five months amid liquidity tightening, as the Chinese central bank (PBOC) drained funds for the third day in a row.

As cited by Reuters, “the volume-weighted average rate of the benchmark 14-day repo traded in the interbank market rose 2 basis points to 4.4476 percent, the highest since March 31. The benchmark rate has jumped around 90 basis points in the past two weeks. The 7-day repo rate has also risen this week.”

The PBOC has drained a net 100 billion Yuan so far this week through reverse bond repurchase agreements.

Economists at Nomura said in a report: “We believe a number of factors will keep interbank liquidity fairly tight into the next macroprudential assessment (MPA) at the end of September."