SHANGHAI: China's money rates slumped on Thursday after the People's Bank of China injected fresh funds via open market operations for the second time this week, building confidence that funds will be adequate through August 5 when banks top up cash reserves to meet regulatory tests.
China's central bank injected 34 billion yuan ($5.55 billion) into the money market through 14-day reverse bond repurchase agreements on Thursday, resulting in a net injection of 136 billion yuan into the market this week.
It had already injected funds using reverse repos on Tuesday, the first time it had done so since early February.
The central bank set the official guidance rate for 14-day reverse repos at 4.5 percent on Thursday, slightly higher than 4.4 percent on Tuesday's 7-day reverse repo.
"Money is plentiful for now and a lot of banks are lending funds," said a dealer at a city commercial bank in Shanghai. "The reverse repo issuance relaxed the market."
The benchmark weighted-average seven-day bond repurchase rate slumped 41 basis points (bps) to 4.58 percent by midday, down from the previous close of 4.99 percent.
The overnight rate dropped 17 bps to 3.56 percent from 3.73 percent, while the 14-day tenor was slightly down at 5.36 percent from 5.44 percent.
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