SHANGHAI: Chinese money rates fell sharply on Friday after the central bank injected a record weekly net 365 billion yuan ($57.91 billion) into the country's money markets ahead of the week-long October holiday.
"Borrowing is now very easy, and our hunger for cash has abated," one trader at a Chinese bank in southern China said.
The benchmark weighted-average seven-day bond repurchase rate opened at 2.8000 percent, more than 100 basis points (bps) below Thursday's close.
The seven-day reverse repo rate has fallen back from the seven-month high of 4.6976 percent it hit on Tuesday, when the central bank injected a single-day record $290 billion yuan.
The decline will be a relief to central bankers as they aim to ease a potential liquidity squeeze over the vacation period, as banks stockpile cash to meet consumer holiday demand as well as preparing for reserve ratio requirement checks due for when the markets re-open on Oct 8.
Rates had been rising steadily from Sept 18 and only reversed the trend on Wednesday, a day after the central bank's record injection.
The central bank has now used reverse repurchase agreements to inject a net 406 billion yuan into the market for September, compared to a net 257 billion yuan for the five weeks in August, including July 31.
The 14-day repo rate fell to 3.5372 percent from 3.9722 percent, and the shortest overnight one-day repo rate fell to 2.4796 percent from 2.9952 percent.
"We've almost reached the national holiday period, and so this level makes sense," said a dealer at a commercial city bank in Shanghai. "But, after the holiday is over, I'm sure the rates will return to normal."
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