China’s benchmark money-market rate climbed the most in four months on speculation cash supply will tighten as local companies pay tax this month.
The People’s Bank of China auctioned 10 billion yuan ($1.6 billion) of 28-day repurchase contracts today, according to a trader required to bid at the sales. The preliminary reading of a Purchasing Managers’ Index was 50.5 in April, compared with a final 51.6 for March, according to data released today by HSBC Holdings Plc and Markit Economics.
“The increase in the seven-day repo is more the effect of tax payments,” said Pin Ru Tan, a Hong Kong-based strategist at HSBC Securities Asia Ltd. “Local companies pay tax every quarter. For the second quarter, the tax payment is in April.”
The seven-day repurchase rate, which measures interbank funding availability, increased 55 basis points, or 0.55 percentage point, to 3.71 percent as of 10:25 a.m. in Shanghai, the biggest increase since Dec. 25, according to a weighted average rate compiled by the National Interbank Funding Center.
The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, was unchanged at 3.29 percent, according to data compiled by Bloomberg.
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