After a prolonged silence during a week that saw a tremendous spike in SHIBOR (the Shanghai Interbank Offering Rate–the rate Chinese banks lend to each other) the Peoples Bank of China spoke earlier today. The Chinese market, after getting smashed earlier this morning, made a U-turn closing almost unchanged.
The interbank rate had spiked to 12+% last week. It had been averaging around 3.2% this year. This really spooked the Chinese market and finally bled into our market toward the weekend. While this was going on the Chinese Central Bank was notably silent, magnifying market angst. BTW our media was discussing this yesterday as a possible “Lehman Moment.” Feel the fear.
Here is a report from Bloomberg with a summary of the PBoC’s comments. I’m also attaching a copy of Session 43 “The Double Whammy!…” for your reference.
What do you think?
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