China Money Market Rates
The China Money Market Rates have fallen due to the regulation that is in place requiring the Chinese banks to make their reserve requirement ratio that has been increased for the third time this year. This is the Chinese attempt to advert the same economic pitfalls that plagues the other world banks in 2008.
By making the banks hold a specific amount of cash reservoirs, they would not be able to loan that portion out, thus ensuring their banks would stay solvent. That is the theory, which at this time has seemed to work.
The current Chinese Money Market Rates are still fluctuating but are staying above 3 % for most terms with their 7 day bond at 2.6340% being the lowest on March 30, 2011.there are a great number of Chinese bonds maturing in the month of April and it is expected the Chinese Central Bank to tighten its monetary policy to ward off inflation.
The highest point of the Chinese repurchase rate was at 7.3% this past January. That was it greatest amount since October 2007. Unfortunately most American investors cannot cash in on these higher interest rates as an investment. The money market rates in china is all tied to the 7 day repurchase rate which regulates the lending potential of their banks and not what they are paying depositors.
For those wishing to invest in this region of the world, there are several Chinese mutual funds that are holding funds that are making a return on this banking mechanism. This is not like opening a money market account with an American bank because their banking system while similar, is different.
The Chinese Money Market Rates are currently rising to help counteract the effects of inflation in this growing economy.