SHANGHAI: China’s primary money rates surged to their highest since June 2015 over the week but edged down on Friday, as liquidity tightness eased.

The volume-weighted average rate of the benchmark seven-day repo traded in the interbank market, considered a key indicator of general liquidity, was 2.8012 percent at midday, around six basis points lower than the previous day’s closing average rate, which was the highest in about 20 months.

For the week, the repo rate was 1.4 basis points higher than the previous week’s closing average.

Pressure on liquidity conditions eased on Friday, with money supply and demand balanced, traders said.

“Market sentiment improved a lot today with prices coming down ... as distribution of fiscal deposits has arrived,” said a trader at a Chinese bank in Shanghai.

The Ministry of Finance traditionally steps up the distribution of fiscal deposits to firms and individuals benefitting from government programmes in the final week of a quarter. The revenue usually lifts deposits in the banking system, traders said.

Several traders said they expected liquidity conditions to remain “balanced” next week.

In open market operations, the People’s Bank of China injected a net 155 billion yuan for the week compared with a net drain of 150 billion yuan a week earlier.

Market sources said the central bank injected funds through targeted reverse repurchase agreements to some banks last week, and the loans are set to mature this Thursday and Friday.

Market participants said additional targeted operations were aimed to make up the shortfall of funds after a large number of maturing open market operations and temporary liquidity facilities (TLF).—Reuters