Reuters: Financial Services and Real Estate: China's money rates rise on quarter-end demand

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China's money rates rise on quarter-end demand Mar 30th 2012, 06:20 Tweet Share this Email Print Fri Mar 30, 2012 2:20am EDT * Lending appetite weak -dealers * Ample money supply seen result of tepid credit demand * Market players remains cautious over domestic economy By Chen Yixin and Kazunori Takada SHANGHAI, March 30 (Reuters) - China's key money rate rose slightly on Friday as banks met regulatory quarter-end requirements due at the end of March, including loan-to-deposit ratios. "Fewer people are willing to lend money for now given the quarter-end factors," said a dealer at a Chinese commercial bank in Shanghai, adding that he expected conditions to ease after the Tomb Sweeping Holiday on April 4. Mainland markets will be closed from April 2 to 4. Money market conditions often tighten near month-end or quarter-end as banks stockpile cash on expectations of heavier customer withdrawals and to meet required regulatory thresholds. However, market players said liquidity remained ample despite the slowdown in lending. Interest rate swaps reflected this, with short-term one-year IRS falling 1 bps to 3.08 percent. Dealers suggested the phenomenon might be due to slackening demand for credit. Those concerned about the domestic economic outlook might be reducing their borrowing, relieving pressure on loan-to-deposit ratios. Benchmark five-year IRS fell slightly at 3.2900 percent, indicating expectations that the government will cut interest rates to prevent the economy from slowing further. The weighted-average seven-day bond repurchase rate was up 19.88 basis points at 3.7112 percent at midday, compared with 3.5124 percent at the close on Thursday. The overnight repo rate, gained 7.71 bps to 2.6819 percent. The 14-day repo rate rose to 4.0259 percent from 3.9671 percent. Current Prev close Change (pct) (bps) 7-day repo 3.7112 3.5124 +19.88 7-day SHIBOR 3.7067 3.4954 +21.13 Note: Repo rate is weighted average. ($1 = 6.3060 Chinese yuan) (Editing by Jonathan Hopfner) Tweet this Link this Share this Digg this Email Reprints Comments (0) This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

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