China Money Rate Rises Most in 3 Weeks After PBOC Drains Cash

China’s money-market rate rose the most in three weeks after the central bank drained capital from the financial market last week, curbing money supply.

The seven-day repurchase rate, a gauge of interbank funding availability, climbed for a fifth day after smaller banks set aside more money on Nov. 15 to meet broadened reserve requirements including customers’ margin deposits. The central bank withdrew 2 billion yuan ($315 million) of capital last week, the first withdrawal in three weeks, according to data compiled by Bloomberg.

“Money supply is quite tight after the central bank’s capital draining from banks, both through reserve payments and open-market operations,” said Guo Caomin, a bond analyst at Industrial Bank Co. in Shanghai. “The central bank may inject cash this week to ease the cash crunch.”

The seven-day repo gained 46 basis points, or 0.46 percentage point, to 4.16 percent as of 9:53 a.m. in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center. That was the biggest increase since Oct. 28.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, climbed two basis points to 3.13 percent, a fifth day of gains, according to data compiled by Bloomberg.

The yield on the 3.94 percent government bond due January 2021 was unchanged at 3.64 percent, according to the Interbank Funding Center.

--Judy Chen. Editors: Andrew Janes, Sandy Hendry

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at +86-21-6104-3043 or xchen45@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.