China Cash Squeeze Returns as Traders Look for PBOC Response

(Bloomberg) — China’s short-term borrowing costs are climbing back toward a two-year high, fueling expectations the central bank will respond with increased cash injections amid global market volatility and difficulties in domestic bond trading.

The overnight repo rate climbed to 2.3%, as demand for cash rose for monthly tax payments and ongoing credit expansion. In February when the rate last hit that level, the People’s Bank of China (PBOC) boosted its open market cash injections to a record to rein in the surge.