China Repo Rate Falls as PBOC Skips Bill Sales; Swap Rate Rises

China’s benchmark money-market rate fell, snapping a three-day advance, after the central bank skipped bill sales today. The one-year swap rate rose for a fourth day after inflation unexpectedly accelerated.

The monetary authority sold only 20 billion yuan ($3.2 billion) of 91-day repurchase agreements, according to a statement on its website. Consumer prices rose 4.5 percent in January from a year earlier, official data showed today. That compares with the median 4 percent estimate in a Bloomberg News survey and a 4.1 percent gain in December. The data is distorted by increased spending over the Chinese New Year holiday in January.

The inflation data “isn’t necessarily pointing to a new trend,” said Matt Huang, a rates strategist at Macquarie Bank Ltd. in Singapore. “You’re going to see a better reading next month and we better wait to see whether the trend is increasing or not.”

The seven-day repurchase rate, a gauge of funding availability in the financial system, fell five basis points to 3.67 percent as of 4:30 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. The one-year swap rate, the fixed cost to receive the seven-day repo rate, rose six basis points to 3.31 percent.

Today’s inflation data may reinforce Premier Wen Jiabao’s cautious approach to adding stimulus to support growth. The government raised retail fuel charges yesterday and companies including Starbucks Inc. and McDonald’s Corp. said last month they lifted prices to counter higher wages and commodity costs.

Gross domestic product may increase 8.5 percent in the first quarter from a year earlier and consumer prices may rise about 3.5 percent, the China Securities Journal reported today, citing the State Information Center.

Government bonds fell. The yield on 3.93 percent government securities due August, 2021 gained five basis points, or 0.05 percentage point, to 3.55 percent.

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.