SHIBOR Spikes Again Ahead of Spring Festival

I recently had two posts on the risk of an early cash crunch at the end of Janaury. See More on Cash Crunch Risks Ahead of Spring Festival and
Spring Festival Cash Crunch.

Based on history, I expect another cash crunch in March at the end of the quarter. However, Chinese New Year is a cash intensive holiday and banks always see an outflow of money at this time. As reported in the links above, some banks are still attracting depositors with high interest rates.

In the days ahead of Spring Festival, SHIBOR typically spikes. Here are two posts from 2012:
Inter-bank liquidity extremely tight ahead of Spring Festival
SHIBOR drops towards normal levels thanks to massive PBOC intervention

Here is SHIBOR today, followed by a chart of the 1 Week SHIBOR rate.

If you click through the links from 2012, you can see that SHIBOR started spiking about the same time in relation to Spring Festival. Chinese New Year fell on January 23 that year and rates moved about just under two weeks before. It is less than two weeks until Spring Festival this year and rates are moving up again. There's reason to expect rates will continue to drift higher ahead of the holiday unless the PBOC intervenes. With the default of a trust product looming at the end of the month as well, fireworks may start early this year.

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