Market rates surged on Wednesday as the.......>

CHINA: Market rates surged on Wednesday as the People's Bank of China continued

to drain liquidity from the interbank market via its open market operations,

traders said. The benchmark volume-weighted average rate of seven-day repo

jumped to 2.9747% at 10:20 am Beijing time, from the previous close at 2.8939%,

while the over-night repo also rose to 2.8505% from the previous close at

2.7923%. Traders told MNI the consecutive net drains each day this week by the

PBOC have tightened liquidity and made banks quite cautious about lending out

money to other institutions, worrying the situation could get worse. The PBOC

has drained a net CNY100 billion via OMOs so far this week. The National

Interbank Funding Center showed the average rate of overnight repo surged as

high as 2.9974% at 9:30 am this morning, while the seven-day repo rose to 3.44%,

but traders said there were some pricing mistakes in the system that exaggerated

the rise.