Key Points – February Report
Liquidity across China’s interbank market eased in February as the PBOC acted to keep conditions loose in the financial system, traders told MNI, and the economy showed the first signs of a rebound through the Chinese New Year holiday, the latest MNI Liquidity Conditions survey showed.
The Liquidity Condition Index fell to 35.7 in February from the previous 65.3, with 51.4% of the traders surveyed reporting conditions as easier after Chinese lunar new year, while 22.9% of traders thought conditions tightened.
The higher the index reading, the tighter liquidity appears to survey participants.
- The Economy Condition Index picked up to 78.6, following last 61.1 reading, marking the highest level since last June when the economy was rebounding after the Shanghai lockdown.
- The PBOC Policy Bias Index stood at 44.3, picking up from last months’ 41.7, with 88.6% of the participants seeing policy stance as on hold.
- The Guidance Clarity Index stood at 58.6, following the previous reading of 54.2, with 82.9% of the participants saying recent PBOC signals were clear.
- The 7-Day Repo Rate Index rose to 57.1 in February, up from the previous 40.3, with 37.1% of the participants seeing the rate curve climbing in the next two weeks while another 22.9% predicted falling rates.
The MNI survey collected the opinions of 35 traders with financial institutions operating in China's interbank market, the country's main platform for trading fixed income and currency instruments, and the main funding source for financial institutions. Interviews were conducted February 6 – February 17.
