China’s money-market rate slipped for a fifth day, the longest run of declines since November, as the central bank refrained from selling three-month bills today to help ensure an adequate cash supply.
The seven-day repurchase rate has dropped 222 basis points since the People’s Bank of China relaxed lenders’ reserve requirements with effect from Feb. 24. The central bank has refrained from selling three-month and one-year bills this year as policy makers ease credit controls to support the economy, which expanded in the fourth quarter at the slowest pace since 2009.
“Repurchase rates continue to drop after the reserve-ratio cut,” said Wee-Khoon Chong, a strategist at Societe Generale SA in Hong Kong. “The PBOC skipped the bill sale today, but it may start again as redemptions get considerably bigger this month.”
The seven-day repurchase rate, which measures interbank funding availability, dropped 20 basis points to 3.28 percent as of 4:40 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. It touched 2.75 percent earlier, the lowest level since Jan. 6. A basis point is 0.01 percentage point.
The central bank sold 20 billion yuan ($3.2 billion) of 91- day repurchase agreements today, according to a trader at a primary dealer required to bid at the auctions. Sales of three- month and one-year bills are usually held weekly and were last held on Dec. 22 and Dec. 27, respectively.
About 172 billion yuan of central bank bills will mature in March, compared with a total 38 billion yuan over the last three months, Chong said.
The one-year swap contract, the fixed cost needed to receive the floating seven-day repo rate, was steady at 3.32 percent, according to data compiled by Bloomberg.
The yield on the 3.01 percent government bonds due November 2012 was little changed at 2.7 percent, according to the Interbank Funding Center.
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