China Sees Signs of Liquidity Stress as PBOC Faces Maturity Test
- One-year interest rate swaps and NCD rates at three-month high
- PBOC faces pressure to keep liquidity flush as economy weakens
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Two key indicators of Chinese interbank borrowing costs have hit a three-month high, as the nation’s central bank faces a crucial decision on what to do with a massive amount of policy loans due next week.
China’s one-year interest-rate swaps, a popular hedging tool sensitive to rate expectations, are now at 2.05%, a level unseen since July 28, Bloomberg-compiled data show. The cost of issuing one-year negotiable certificate of deposits, a key form of banks’ short-term debt, also has jumped to a three-month peak of 2.12%.