(Yicai Global) Jan.7 – The reference rates at which Shanghai banks lend unsecured funds to other banks have fallen after the country's central bank cut the deposit reserve ratio by 100 basis points on Jan. 4, boosting liquidity.

The Overnight Shanghai Interbank Offered Rate was down 20.2 points at 1.4470 percent while the seven-day SHIBOR fell 8.8 to 2.4750 percent. The one-month SHIBOR declined 10.1 to 2.9090 percent and the three-month rate dropped 7.4 to 3.1410 percent.

The People's Bank of China did not carry out reverse repurchases today, and CNY170 billion (USD24.8 billion) in reverse repos were due to mature, resulting in a net drain of the amount.

The central bank announced plans to cut financial institutions' deposit reserve ratio by 1 percentage point on Jan. 4, releasing CNY1.5 trillion in funds. This RRR cut for financial institutions may continue and the PBOC may also reduce the market rate via open market operations, Li Xunlei, chief economist at Zhongtai Securities, told Yicai Global. 

Editor: William Clegg