The People’s Bank of China gauged demand for a sale of three-month bills tomorrow, according to two traders required to bid at the auctions. Yuan positions at Chinese financial institutions stemming from foreign-exchange transactions, a gauge of money flows, rose by 1.22 trillion yuan ($199 billion) in the first three months of 2013, more than four times as much as in the same period last year, central bank data showed. The yuan gained 1 percent this quarter.
“The central bank’s gauging of demand shows it will resume bill sales soon,” said Shi Lei, Beijing-based head of fixed- income research at Ping An Securities Co., a unit of the nation’s second-biggest insurance company. “Foreign capital inflows are too big. The central bank needs more tools to mop up excess liquidity.”
The one-year interest-rate swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, climbed four basis points, or 0.04 percentage point, to 3.29 percent at 10:14 a.m. in Shanghai, according to data compiled by Bloomberg.
The central bank last issued bills in December 2011. It also gauged demand for 28-day repurchase contracts today.
The seven-day repurchase rate, which measures interbank funding availability, dropped 19 basis points to 2.99 percent, according to a weighted average compiled by the National Interbank Funding Center.
--Judy Chen. Editors: Robin Ganguly, Simon Harvey
To contact Bloomberg News staff for this story: Judy Chen in Shanghai at firstname.lastname@example.org.