China is on holiday today (and Hong Kong, for the Dragon Boat Festival)

So, no USD/CNY fixing. Incidentally, there are revers repos rolling off today, 40bn yuan maturing (there were none on Monday). Also, 30bn yuan mature tomorrow. So we're likely to see an injection of funds though OMOs from the People's Bank of China on Wednesday.

Anyway, back to the post headline. In Caixin today: Editorial: Policymakers Need to Tread Carefully When Tightening Policy to Avoid Liquidity Crunch

At the very least its worth a read for background on what's going on in Chinese money markets. As a recap, or a primer if its all new to you.

The PBOC is attempting to

  • discourage risky high-leverage loans, diffuse asset bubbles and tighten policy

But, by using money market tightness:

  • it could derail China's fragile economic recovery as many companies, especially small-and medium-sized enterprises, continue to see their profits weaken and struggle to raise funds.

Plenty more here at the link