As is usually the case, there is a sudden and desperate scramble for liquidity to window-dress balance sheets and it has sent China 7-day repo-rates (the premium for locking in liquidity across the calendar new year) to 6.00% – the highest since year-end 2013.
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Perhaps in response to this apparent crisis, The PBOC has also announced that banks will be allowed to use reserves at the central bank of up to two percentage points to meet liquidity needs during the February lunar new year celebrations.
China’s central bank is allowing temporary reserves use for 30 days to cover any liquidity needs.
Notably, at the same time, overnight Hong Kong Dollar HIBOR rates exploded higher…
This post was published at Zero Hedge on Thu, 12/28/2017.