CHINA’S RISKY INTERBANK CASH SQUEEZE LIKELY TO EASE

HONG KONG - After allowing an interbank cash squeeze to intensify since June 6, the People’s Bank of China (PBoC) on Tuesday signalled a readiness to provide liquidity to stabilise the market. The announcement came as welcome news to China’s equity market, which had fallen by almost 20% since end-May on worries of slowing growth and, more recently, the impact of the intensifying cash squeeze on economic activity and bank profits. While still elevated, interbank interest rates have eased in the past two days and the equity market has stabilised, says BBVA Bank.