23 Oct 2013
Tightening China conditions boost JPY safety demand, higher-yielding AUD and NZD under pressure
FXstreet.com (London) - The Yen has continued to climb on Asian safety demand after the Chinese benchmark money market rate jumped to its highest level since 29 July.
The Chinese seven-day repo rate climbed 42bps as a result of net liquidity withdrawals by the central bank. Since 17 October, the People’s Bank of China has suspended reverse repos, withdrawing CNY44.5bn.
The liquidity squeeze has helped the Yen climb 0.91 percent against the dollar to JPY97.2500.
The Kiwi dollar has probably been the hardest hit by the Chinese funding concerns, slumping 1.64 percent against the dollar to USD0.8374. The Australian dollar has fallen 0.97 percent to USD0.9614 on the same risk-off trade hitting demand for higher-yielding currencies.
With China set to meet its growth targets and inflation on the rise, the PBOC may move to tighten conditions further to trim inflation should CPI numbers pick up speed.
The Chinese seven-day repo rate climbed 42bps as a result of net liquidity withdrawals by the central bank. Since 17 October, the People’s Bank of China has suspended reverse repos, withdrawing CNY44.5bn.
The liquidity squeeze has helped the Yen climb 0.91 percent against the dollar to JPY97.2500.
The Kiwi dollar has probably been the hardest hit by the Chinese funding concerns, slumping 1.64 percent against the dollar to USD0.8374. The Australian dollar has fallen 0.97 percent to USD0.9614 on the same risk-off trade hitting demand for higher-yielding currencies.
With China set to meet its growth targets and inflation on the rise, the PBOC may move to tighten conditions further to trim inflation should CPI numbers pick up speed.