China Money Rate Drops First Time in Four Days as PBOC Adds Cash

China’s money-market rate dropped for the first time in four days as the central bank pumped cash into the banking system using reverse-repurchase agreements.

The People’s Bank of China yesterday conducted 153 billion yuan ($24.5 billion) of 14-day reverse repos and 5 billion yuan of seven-day contracts, according to a central bank statement. The cash for the 14-day agreements was transferred yesterday to banks and that for the seven-day will go through today, having been held back a day to ensure they don’t mature during a three- day holiday that starts Jan. 1, according to Wang Huane, a senior bond trader at Qilu Bank Co.

“Liquidity will remain stable as long as the central bank keeps conducting reverse-repo operations,” said Wang, who is based in Jinan, capital of the eastern province of Shandong.

The seven-day repurchase rate, which measures interbank funding availability, dropped five basis points to 4.12 percent as of 4:41 p.m. in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center. It rose 70 basis points this week.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repo rate, rose one basis point today to 3.35 percent, according to data compiled by Bloomberg. It was unchanged this week.

The yield on the 2.95 percent government bonds due August 2017 dropped four basis points to 3.21 percent, according to the Interbank Funding Center. It fell four basis points, or 0.04 percentage point, this week.

--Judy Chen. Editors: James Regan, Andrew Janes

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.

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