China’s benchmark seven-day money rate slumped on Monday, with the shortest overnight repo rate rising slightly as ample liquidity in the market attracted more market players to the low-cost overnight repo.
“Demand has changed,” said a dealer at a state-owned bank in Beijing. “There are many people lending seven-day repos, but the demand for them is very low. Given that the one-day repo’s cost is lower and liquidity is quite good, funds prefer this shorter tenor.”
The benchmark weighted-average seven-day bond repurchase rate slumped 39.77 basis points to 3.0023 percent from 3.4000 percent at the close on Friday, and the shortest overnight one-day repo rate jumped to 2.3122 percent from 2.1406 percent.
The 14-day repo rate fell to 3.2154 percent from 3.4896 percent.