The seven-day repurchase rate, an index of funding availability agreed between Chinese banks, mounted by 110 basis points, rising to 4.98 percent, the highest gauge since January 20, the weighted average data of the National Interbank Funding Center in China showed.
"The IPOs are affecting the market, leading to cautious sentiment with fewer institutions willing to lend," Li Haitao, a Shanghai-based analyst at China Guangfa Bank Co. was quoted as saying by Bloomberg. "Quite a few traders found it very difficult to meet their funding needs yesterday," he added.
Earlier this week, the People's Bank of China abstained from participation in open-market operations. Its neutral position contributed to the rise in the Shanghai money rate.
Generally, banks experience pressure on liquidity for a relatively short-term period in the year-end due to a necessary accumulation of funds to pay taxes, offset balance sheets and meet market regulatory criteria.
