China Banks Brace for June Cash Squeeze as Fund Costs Jump
- One-month borrowing rate climbs to the highest in two years
- Shortage to be more severe than in recent years: bond analyst
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China’s deleveraging dilemma -- how to squeeze excess liquidity out of the financial system without spurring a full-blown cash crunch -- is facing its toughest test.
June is traditionally a tight time for banks because of regulatory checks, and this year, lenders are grappling with an official campaign to reduce the level of borrowing as well. Wholesale funding costs climbed to the most expensive in history, and the 30-day Shanghai Interbank Offered Rate has jumped 51 basis points this month to the highest level in more than two years.