China's money-market rate surged to its highest level in seven months amid speculation banks are hoarding cash to meet quarter-end regulatory requirements and holiday withdrawals.
The overnight repurchase rate climbed for a fourth day even after the People's Bank of China injected 101 billion yuan ($16 billion) into the financial system this week, ending a three-week run of withdrawals.
On Thursday, the central bank conducted 55 billion yuan of seven-day and 105 billion yuan of 28-day reverse-repurchase operations to add funds. China's financial markets will be shut for a weeklong break from Oct 1.
"Cash supply has become quite tight as the holiday and quarter-end approaches," said Hu Hangyu, a Beijing-based bond analyst at Citic Securities Co, China's biggest listed brokerage.
"Even though the central bank has stepped up injections, it can't prevent a cash crunch."
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