China’s interbank lending rate has hit its highest level since June, despite regulators’ attempts to calm concerns over a potential cash crunch.
The seven-day repurchase rate rose to as much as 9% on Friday, even though China’s central bank made an emergency capital injection the day before.
The rate is a key gauge of how much is available in short-term funds for the country’s banks to lend to one another.
The turmoil caused China’s benchmark stock index to fall by more than 2%.
Chinese stocks have posted nine days of declines, amounting to their worst losing streak in nearly two decades.
Analysts say the rate rise also shows that China’s central bank, the People’s Bank of China (PBOC), is struggling to control rising negative market sentiment.
