REPORT ON NATIONAL INTERBANK FUNDING CENTER IN FEBRUARY 2002

 

The total turnover decreased slightly and the market rate dropped

Because of the Spring Festival, there were only 17 trading days in February. The total turnover was 526.283 billion yuan with 3538 deals being made. The average daily turnover was 30.958 billion yuan, up 10.45 per cent compared with January. The market rates fell significantly compared to January, among which the weighted average interest rate of interbank borrowing decreased 4.18 per cent and weighted repo rate decreased 2.85 per cent as against that in January. The turnover of cash bond dropped with the average daily turnover down 25.78 per cent compared to the month before.

 

Interbank borrowing rate remained stable and the turnover of 20-day maturity increased sharply

The average daily turnover of February increased slightly by 0.76 per cent compared to January. Trading was slack around the Spring Festival. The interest rate cut did not lead to the sharply downward movement of weighted average rate. Because the trade became active at the end of February, the effect of the rate cutting was achieved. The average rate dropped to 2.142, the lowest on February 27.

 

Because of the long holidays for the Spring Festival, the average daily turnover of short-term maturity decreased significantly compared to January, among which overnight call money and 7-day declined 53.77 per cent and 19.28 per cent, respectively when compared to January. The turnover of overnight call money accounted for 4.33 per cent of the total turnover, while the 20-day soared 786.73 per cent, accounting for 26.95 per cent of the total turnover.

 

Repo rate fluctuated severely and the effect of rate cut was significant

Before February 21, the weighted rate remained stable at around 2.140. It dropped to 1.992 immediately on February 21 -- the same day as the interest rate cut -- and kept going down slowly. On February 28, it closed at 1.967, the lowest of the month -- a significant effect of the rate cut. The trade was also inactive around the Spring Festival and climbed up at the end of February.

Similar to the interbank funding market, the 14-day and 21-day increased 276.58 per cent and 462.46 per cent compared to January. But the 7-day decreased 15.64 per cent and its proportion in the total turnover fell from 86.22 per cent in January to 64.02 per cent last month. There was no trading of the maturity beyond 180 days.

 

Spot bond transaction moderately decreased

The spot bond transaction decreased moderately in February with the daily average turnover dropping 25.78 per cent compared to last month. The trading was rather sluggish around the Spring Festival and there was no trade on February 10-11. Stimulated by the rate cut, the weighted redemption yield fell from 2.800 to 2.530 on February 25, the lowest in February. The weighted redemption yield rebounded at the end of February, because of the active trade of the long-term bond and closed at 2.748 with 3.135 billion yuan, the largest daily turnover in the month.

 

Institutional funding situation

In February, the structure of the inter-institution capital flow remained largely unchanged, but the funding situation reflected the surplus of the fund. The borrowing of insurance companies continually declined for the second straight month. Lending increased sharply and net borrowing plummeted by 94.38 per cent when compared to January. Because of the Spring Festival, borrowing amount and net borrowing amount of securities firms and investment funds decreased severely. The funding of State-owned commercial banks and city commercial banks did not change much compared to January. And the net borrowing of policy banks soared several times because the issue of financial bond had not begun yet.

                                   (By Chen Lifeng)