The People’s Bank of China scaled back the use of a short-term lending tool in its open-market operations, draining cash from the financial system as banks prepare to meet year-end liquidity checks by regulators.
The central bank auctioned 10 billion yuan (US$1.5 billion) of seven-day reverse-repurchase agreements at an interest rate of 2.25 percent, less than the 30 billion yuan offered the previous week. Banks’ demand for funds typically rises in the run-up to deadlines for them to meet regulatory requirements.
“It’s surprising to see a net withdrawal today in open-market operations,” Bank of Tokyo-Mitsubishi UFJ (China) Ltd chief financial market analyst Li Liuyang said. “It either means there is too much liquidity in the interbank market, so there’s not much demand for reverse repos, or the central bank is preparing to use other tools, including reserve-requirement-ratio cuts, to meet demand for funds.”
The seven-day repo rate rose three basis points to 2.43 percent as of 4:30pm in Shanghai, the highest level since Sept. 29, according to a weighted average from the National Interbank Funding Center.
The rate opened at 2.25 percent, as it has almost every day since the central bank last cut its benchmark interest rates on Oct. 26.
The central bank has lowered its benchmark one-year lending and deposit rates six times since November last year to help counter an economic slowdown that has brought about the slowest growth in more than two decades. The seven-day repo rate has dropped 253 basis points this year, set for the biggest annual decline on record.
The yield on bonds due in October 2025 fell two basis points to 2.82 percent, after rising by the same amount on Monday, according to National Interbank Funding Center prices.
The bull run in China’s bond market is likely to end in the first half of next year as the economy stabilizes, according to the findings of a Bloomberg survey of 22 traders and analysts last week.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
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