SHIBOR in the coming 3 months will decrease
SHIBOR(Shanghai interbank offered rate)is the short-term of the capital borrowing and lending rates between the different banks. It contains two rates, one is borrowing rate which banks are willing to pay. Another is the lending rate which banks are willing to loan. A bank’s borrowing means another bank’s lending. A bank’s rate difference is the bank’s profit.
Loaning and gaining the interest rate is the main profit of banks. Although there many people going to deposit, the banks are not always have the adequate capital to loan. In this moment, the interbank lending has played an important role. Banks with enough money may lend them to other banks which are lack of money on the markets. And then after borrowing enough money from other banks,the banks have the probability to lend loan to customers.
From an overlook of now China finance market, I think that the SHIBOR in the coming 3 months will decrease. There are lots of reasons reveal that. First, in the bonds market, default has taken place in many times recently. The risk of default leads to the escape of currency from bond market. In this case, the demand of bonds will decrease in a way and further the price of bond will also decrease, which leads to the fall of market interest rate.
Secondly, in the past some months, our country has encounter a finance crisis. The development of the enterprise met with resistance. So for the enterprise the demand of currency will decrease. Therefore the SHIBOR will decrease because enterprises don’t need much money to invest due to the bad economic environment.
Thirdly, SHIBOR is closely linked to the other interest rates in the market. We have known that interest rate means the value of currency. When the difference between SHIBOR and market interest rates appears sharply, the phenomenon of interest arbitrage happens. Now the market interest rate is low and will remain this condition in some time.
This chart describes the volatility of the SHIBOR in an average data from 2000 to 2015 including 1,2,3,4 months and during the month. Analyzing the chart we can predict the SHIBOR in the future 3 month will decrease in a overall.
Another important influence factor is the stocks. The chart below is the volatility of SHIBOR compare with the Shanghai composite index. From the chart we can see that they are almost synchronous in changing.
From what has been discovered above, I draw a conclusion that SHIBOR in the coming 3 months will decrease.