CD offered rates – the de facto benchmark interest rates in the CNH market – have declined sharply. The 1Y CD offered rate is now around 3.3-3.4%, versus a peak of 4.5-4.7% in March. “CD rates are expected to fall further, likely to around 3.0% in the coming months, on looser liquidity conditions in China’s domestic market, lower onshore deposit rates following the recent rate cut, and less refinancing pressure”, according to Standard Chartered.The peak redemption period is over. CDs that matured in January-May account for 74% of this year’s total. Monthly CNH CD redemptions will therefore slow to an average of CNY 9bn from June onwards, from CNY 35bn in the first five months of the year.
The material has been provided by InstaForex Company – www.instaforex.com