China's primary money rates remained stable this week thanks in part to weaker demand for cash prompted by China's official deleveraging campaign, and despite the central bank conducting a net drain of liquidity from the banking system for a fourth consecutive week.
Traders and market watchers confirmed that they saw loose liquidity conditions in the market. One portfolio manager in Shanghai said that policies aimed at reducing financial system leverage had been effective in reducing demand for cash - what some market players have called "passive loosening".
The volume-weighted average rate of the benchmark seven-day repo traded in the interbank market, considered the best indicator of general liquidity in China, was 2.6966 percent.
That is just 0.2 basis points higher than the closing average rate of 2.6947 percent on Wednesday, April 4. China's markets were closed on Thursday and Friday last week for a national holiday.
The Shanghai Interbank Offered Rate (SHIBOR) for same tenor fell to 2.7980 percent, down 3.2 basis points since April 4. The one-day or overnight rate stood at 2.5413 percent and the 14-day repo stood at 3.1634 percent.
For the week, the People's Bank of China (PBOC) drained a net 100 billion yuan ($15.92 billion) through its open market operations, the fourth consecutive week of net drains.