24 Dec 2013
Will the PBoC intervene to inject cash today?
FXstreet.com (Bali) - Focus in Asia will remain in the Chinese money markets, with tensions having escalated in recent weeks after a surge in cash rates.
Will the PBoC engage in further SLOs (Short term Liquidity Operations) to ease market jitters? Or will they step aside for a fifth consecutive session after the little impact of its last cash injection mid last week?
The 7-day repo rate was pressured on Monday, closing near the 9% level after touching a high of 10%. As explained in recent articles, seasonal patterns have led Chinese banks to demand strong cash flows in order to meet deposit-to-loans requirements by regulators. Should the PBoC fail to intervene today, it may cause further selling pressure in Chinese/broader Asia stocks.
Will the PBoC engage in further SLOs (Short term Liquidity Operations) to ease market jitters? Or will they step aside for a fifth consecutive session after the little impact of its last cash injection mid last week?
The 7-day repo rate was pressured on Monday, closing near the 9% level after touching a high of 10%. As explained in recent articles, seasonal patterns have led Chinese banks to demand strong cash flows in order to meet deposit-to-loans requirements by regulators. Should the PBoC fail to intervene today, it may cause further selling pressure in Chinese/broader Asia stocks.