Short-Term Shanghai Interbank Offered Rate Rose Again25 May, 2011, 16:09. Posted by Zarathustra
Tags: Economy, SHIBOR
The short-tend of the Shanghai Interbank Offered Rate (SHIBOR) has surged recently. The 2-week SHIBOR now stands at 5.5975%, while the 1-month rate stands at 5.3367%, which means borrowing money for 2 weeks in the interbank market of China appears to be more costly than borrowing for 1 month.
The last time when borrowing short-term was more costly than longer-term happened around the time of the Chinese New Year holiday as that period has been traditionally associated with higher demand for cash.
The chart below shows the SHIBOR curve as of today, compared with the SHIBOR curve at the end of last month. The rates of borrowing for 3 weeks or longer haven’t changed much, yet the short-end has increased quite dramatically.
And this chart shows the SHIBOR curve at the end of January, days before the Chinese New Year holiday.
The short-end of the curve has been fluctuating widely, yet as you can observe here, the longer end of the curve has been steadily.