It probably won’t impress Willem Buiter, but the Chinese authorities have attempted to suck some more liquidity out of the system.
Via Bloomberg on Thursday:
The People’s Bank of China sold three-month bills at a yield of 1.4088 percent, unchanged for an eighth sale in a row, according to traders at Agriculture Bank of China and Bank of Communications Ltd. The monetary authority offered 160 billion yuan ($23.4 billion) of the securities at the auction today. That was the biggest amount since Bloomberg started compiling the data in 2004.
Now, that’s RMB30bn more that last Thursday’s auction from the PBOC and comes amid reports that the country’s bank lending in the first two weeks of March was RMB400bn.
If true, some analysts reckon that will prompt further tightening, probably via a reserve requirement ratio increase. Although it is worth noting the Chinese authorities have drained a total of drain of RNB218bn from the system this week, and that should go some way to easing fears that a third rise in banks’ reserve requirements this year is on the cards.
Either way, stand by for more Chinese tightening jitters.
Related links:
China’s banks, more liquid-hot than ever – FT Alphaville
China’s great central economy, and big local problems – FT Alphaville
China’s liquid real estate bubble – FT Alphaville