SHANGHAI: China's money rates traded narrowly on Friday, with dealers citing abundant liquidity in the market and expectations of no immediate policy easing after weaker-than-forecast trade data.
China's imports sank 15.3 percent in January versus January 2011 the lowest since August 2009 while exports fell 0.5 percent over the same period, the worst showing since November 2009, customs data showed on Friday.
But analysts said the weakness was mainly a reflection of seasonal factors, as the Lunar New Year fell in January this year while it was in February last year.
Dealers said liquidity in the market was quite ample in the short term, but they were still cautious over long-term funding in the market due to a resumption of open market operations and expectation of no cuts in reserves requirement ratios for now.
"Money market conditions are really good today but worries over longer-term cash calls are still lingering," said a dealer at a Chinese bank in Shanghai.
"Seasonal factors cannot be the reason to ease policy for now. We still need to wait and see," said a dealer at a Chinese bank in Shanghai.
Higher-than-expected inflation, which hit 4.5 percent in January, well ahead of market expectations and breaking a five-month trend of easing price pressures, also reinforced views that there would be no RRR cut.
The benchmark weighted-average seven-day bond repurchase rate fell 3.29 basis points to 3.6365 percent from 3.6694 percent at the close on Thursday.
The 14-day repo rate rose to 3.8479 percent from 3.8161 percent, and the shortest overnight one-day repo rate rose to 2.6951 percent from 2.6646 percent.
In the bond market, short-term interest rate swaps (IRS) fell on ample liquidity, but long-term IRS rose on the lasting impact of higher-than-expected inflation.
One-year IRS was at 3.26 percent, down from Thursday's close of 3.28 percent, while the benchmark five-year IRS rose to 3.43 percent from 3.41 percent.
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