China Money Rate Jumps Most in 13 Months on Outflows, Hoarding
- Increase comes even after PBOC adds 410 billion yuan via MLF
- Currency-related withdrawals are tightening liquidity: Guangfa
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China’s 14-day money-market rate jumped the most in 13 months as capital outflows and cash hoarding in the runup to the Lunar New Year holidays outweighed central bank injections.
The nation’s foreign-exchange reserves dropped by a record last month, as the People’s Bank of China sold an unprecedented amount of foreign currency in an effort to stem a slide in the yuan. The monetary authority provided 410 billion yuan ($62 billion) to commercial lenders via its Medium-term Lending Facility on Tuesday and lowered the interest rates on the loans. It plans to inject more than 600 billion yuan into the financial system to meet demand before the week-long Chinese New Year holidays that start Feb. 8.