China’s short-term money market rates rise despite central bank’s liquidity injection21 September, 2012, 12:19. Posted by Zarathustra
As we approaches the quarter-end and the long holiday of National Day and Mid-Autumn Festival, the quarterly liquidity crunch in the Chinese banking system is back.
The repo rates as well as SHIBOR in the short-end are edging higher. That came despite another big round of liquidity injection from the People’s Bank of China via reverse repo, as banks often increase cash level prior to period-end to meet regulatory requirement.
The chart below shows SHIBOR in the short-end. After coming off the high in August, they are now back to the high.
So after record injections in August, which brought short-term rates down, we are not back with an inverted curve.