Capital fabrics maintain tight balance

â–¡ reporter Wang Hui

Against the background of the continued net operation of the central bank's open market operations on Tuesday, the market funds still maintained a tight balance since last week. Analysts said that the recent monetary policy operation shows that the central bank's attitude of maintaining moderate liquidity has not changed. However, due to the continuous separation of the “quantity and price” of funds, and the market's expectation to turn cautious, the short-term funds are expected to be significantly improved.

Medium and long-term capital interest rates rise

The central bank conducted a 100-billion-day, 7-day, 70-billion-day, and 15-billion-day 28-day reverse repurchase operation on Tuesday, with interest rates remaining at 2.25%, 2.40%, and 2.55%, respectively. Since 80 billion reverse repurchase expires on that day, a net delivery of 105 billion yuan was achieved on a single day.

In terms of funds, although the central bank has operated the open market for net investment for three consecutive trading days, the interbank market funds continue to maintain a tight balance pattern since the latter half of last week. On the same day, the weighted average interest rate of pledged repo (deposit institutions) of the interbank market overnight, 7 days, 14 days and 1 month period closed at 2.27%, 2.47%, 2.76% and 3.03% respectively. Compared with the previous day, the overnight interest rate fell slightly by 2bp, and the 7-day, 14-day and 1-month repo rates rose by 2bp, 9bp and 12bp respectively, and the medium and long-term capital prices continued to rise.

Traders said that due to the current tax payment and regular payment period, the supply of funds of the Bank and the joint-stock banks was limited, and the market liquidity was not changed. In addition, the rapid depreciation of the RMB against the US dollar in recent days has also aggravated market institutions' concerns about the liquidity of the local currency.

Tight balance pattern continues

Market participants pointed out that the central bank continued to maintain a net investment of 100 billion yuan, pushing for a small downside of short-term capital prices overnight, but after the bond market interest rate experienced a sharp rise, buying appeared, stimulating the rise in short-term capital demand, thus making overnight funds in price changes. In large cases, demand has increased significantly. At the same time, the policy intention of the regulator to promote financial deleveraging through a modest increase in the price level of funds has not changed. The recent trend of fund interest rates for various periods is also a reflection of the central bank’s intention to regulate.

Bank of Communications International and other institutions believe that, given the recent renewed pressure on the depreciation of the renminbi, inflation will pick up and monetary policy will remain neutral in the short term. The analysis from the DM financial peer quotation platform also believes that the foreign exchange holdings continue to decline, resulting in the continued passive tightening pressure on the liquidity of the local currency. The gap in liquidity supply and demand in the previous period is mainly filled by the RRR reduction, but the domestic economic fundamentals are gradually stabilizing. , as well as anti-risk, anti-foam, and stable exchange rate, will continue to promote monetary policy to continue to be substantial and stable in the short to medium term.

Analysts further pointed out that the rise in capital prices in recent days does not mean that the funds are tightening, and the results of “separation of quantity and price” or as “de-leveraging” by the central bank gradually emerge. And with the weakening of the renminbi, the adjustable range of interest rates in the money market has further expanded, and the risk of the central bank de-leveraging and guiding the upward cost of capital is generally controllable. In the face of current tax payment and many uncertainties at the end of the year, the central bank will also flexibly carry out monetary policy operations to actively regulate and control. On the whole, while short-term funding is expected to remain tight, while liquidity expectations before the end of the year do not need to be excessively pessimistic.

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