PBOC Cash Drain

SHANGHAI—China’s central bank has stepped up efforts to drain cash from the country’s financial system in the past week, as it seeks to curb excessive borrowing and tame frothy markets.

The cost for banks to borrow from each other, measured by the so-called seven-day repo rate, rose to 3.49% this week—a 19-month high—from 2.92% on Monday. The surge followed the People’s Bank of China’s withdrawal of a net 130 billion yuan ($18.85 billion) from China’s money markets over the four trading days until Tuesday this week, which has been partially reversed.

At the same time, the PBOC has been guiding major state-owned banks to restrict their short-term lending to other financial institutions, according to market participants.

THE WALL STREET JOURNAL

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

Latest posts by Stephen Innes (see all)