PBOC sells 3-year bills at lower rate
By Leo Zhang |
April 23, 2010, Friday
|
Print Edition
Print Edition
CHINA'S central bank yesterday sold three-year bills at a lower rate thanks to strong demand from banks, reducing the possibility that it would resort to raising banks' reserve requirements and interest rates in the near term.
The 90 billion yuan (US$13.2 billion) debt was sold at a yield of 2.74 percent in the interbank market, compared with 2.75 percent at the last sale on April 8, when the People's Bank of China issued 15 billion yuan worth of three-year bills.
The PBOC has mopped up a cumulative 65 billion yuan of liquidity from the country's financial markets this week, compared with 14 billion yuan last week, according to data complied by Bloomberg.
''As banks' credit extension is restricted under the current scenario, the larger issuance was designed to meet market demand,'' said Li Huaiding, an analyst with Guosen Securities. ''The yields on central bank bills won't likely rise in the short term.''
China's banking regulator on Tuesday ordered larger banks to conduct quarterly stress tests on property loans and ensure the risks from such lending are strictly controlled after the government tightened credit rules to dampen real estate speculation.
Stiff measures
Authorities have already started to curb mortgages for multiple-home purchases and increased the down payment after housing prices soared 11.7 percent last month from a year earlier, the most since records started in 2005.
Yuan-backed new credit in China fell in March to 510.7 billion yuan (US$74.82 billion), from 700.1 billion yuan in February. Economists expected the PBOC to raise banks' reserve requirements and even interest rates as early as this quarter.
The PBOC early this year raised commercial banks' reserve ratio twice by a combined 1 percentage point as part of efforts to tame inflation.
Consumer prices gained 2.4 percent annually last month, down from a 2.7 percent rise in February.
''After launching polices to curb speculation in the property market, authorities may slow the pace of tightening to gauge market response,'' said Liu Yu, an Orient Securities trader. ''The central bank is not likely to raise interest rates before April's economic data are unveiled.''
The 90 billion yuan (US$13.2 billion) debt was sold at a yield of 2.74 percent in the interbank market, compared with 2.75 percent at the last sale on April 8, when the People's Bank of China issued 15 billion yuan worth of three-year bills.
The PBOC has mopped up a cumulative 65 billion yuan of liquidity from the country's financial markets this week, compared with 14 billion yuan last week, according to data complied by Bloomberg.
''As banks' credit extension is restricted under the current scenario, the larger issuance was designed to meet market demand,'' said Li Huaiding, an analyst with Guosen Securities. ''The yields on central bank bills won't likely rise in the short term.''
China's banking regulator on Tuesday ordered larger banks to conduct quarterly stress tests on property loans and ensure the risks from such lending are strictly controlled after the government tightened credit rules to dampen real estate speculation.
Stiff measures
Authorities have already started to curb mortgages for multiple-home purchases and increased the down payment after housing prices soared 11.7 percent last month from a year earlier, the most since records started in 2005.
Yuan-backed new credit in China fell in March to 510.7 billion yuan (US$74.82 billion), from 700.1 billion yuan in February. Economists expected the PBOC to raise banks' reserve requirements and even interest rates as early as this quarter.
The PBOC early this year raised commercial banks' reserve ratio twice by a combined 1 percentage point as part of efforts to tame inflation.
Consumer prices gained 2.4 percent annually last month, down from a 2.7 percent rise in February.
''After launching polices to curb speculation in the property market, authorities may slow the pace of tightening to gauge market response,'' said Liu Yu, an Orient Securities trader. ''The central bank is not likely to raise interest rates before April's economic data are unveiled.''
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