China Money-Market Rate Rises a Second Day as Tax Payments Loom

China’s benchmark money-market rate rose for a second day on speculation cash supply will wane as corporate tax payments loom and a public holiday approaches.

Companies need to pay about 400 billion yuan ($64.7 billion) to 500 billion yuan in total annual taxes before the end of this month, according to Chen Qi, a strategist with UBS Securities Co. in Shanghai. Domestic financial markets are closed for three days from March 29.

“There are expectations for slight tightening in the money-market rates ahead of the holiday and month-end tax payments,” Chen said. Still, liquidity is not tight given more capital inflows from overseas, she added.

The seven-day repurchase rate climbed one basis point to 3.12 percent as of 11:05 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. The one-year interest-rate swap, the fixed cost to receive the seven-day repo, rose two basis points to 3.28 percent, data compiled by Bloomberg show.

The People’s Bank of China gauged demand for 28-day repurchase agreements and seven- and 14-day reverse-repurchase contracts this morning, according to a trader at a primary dealer required to bid at the auctions. The two operations would add or drain funds from the banking system.

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

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

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