China Money Rate Climbs Most in 4 Weeks as Month-End Approaches

China’s money-market rate climbed most in four weeks on speculation cash supply will tighten as banks hoard funds to meet month-end capital requirements.

The People’s Bank of China today gauged demand for seven- and 14-day reverse repurchase-contracts before an auction tomorrow, according to a trader required to bid at the sales. Preparatory work for starting sovereign debt futures is “basically complete,” the China Securities Journal reported today, citing Jiang Yang, vice chairman of China Securities Regulatory Commission.

“The rising repo rates shows banks are probably concerned about the month-end cash supply,” said Wang Huane, a senior bond trader at Qilu Bank Co in Jinan, capital of the eastern Shandong province.

The seven-day repurchase rate, which measures interbank funding availability, touched a four-week high of 3.40 percent, according to a weighted average rate compiled by the National Interbank Funding Center, and today’s 51 basis point gain is the biggest since Oct. 29. A basis point is 0.01 percentage point.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, declined two basis points to 3.37 percent, according to data compiled by Bloomberg.

The yield on the 3.1 percent government bond due September 2015 dropped two basis points to 2.98 percent, according to the Interbank Funding Center.

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at xchen45@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net