SHANGHAI:China's benchmark money rate edged higher on Monday as banks held on to cash to meet regulatory requirements, including loan-to-deposit ratios, due at the end of March.
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 thresholds. But dealers said the traditional month-end squeeze appeared to be relatively mild this month.
"The quarter-end makes us cautious, more or less, so we are not willing to lend money for now," said a dealer at a Chinese commercial bank inShanghai.
The weighted-average seven-day bond repurchase rate jumped to 3.3148 percent atmiddaycompared with 2.9686 percent at the close on Thursday, while the 14-day repo rate rose to 4.0039 percent from 3.7845 percent previously.
But traders said there is still ample liquidity in the market, citing a decline in the overnight repo rate, which dropped 3.2 basis points to 2.6896 percent.
Dealers said they expected money rates to rise slightly this week, but a large quantity of bills and repos maturing could limit the rise.
On Monday, traders said thatChina's central bank recently surveyed domestic commercial banks about demand for 28-day and 91-day bond repurchase agreements.
A total of 109 billion yuan ($17.28 billion) worth of central bank bills and repos are due to mature this week, boosting expectations that the central bank will inject liquidity over the same period.
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