China’s overnight money-market rate rose for a ninth day, the longest stretch since March, as the central bank drained funds from the financial system.
The People’s Bank of China sold 10 billion yuan ($1.6 billion) of 91-day bills today at a yield of 2.9089 percent, said a trader at a primary dealer required to bid at the auctions. The PBOC also offered 9 billion yuan of 28-day repurchase agreements at 2.75 percent, according to a statement on its website. The central bank withdrew 35 billion yuan last week after recommencing sales of the short-term securities on May 9 for the first time since December 2011.
The one-day repurchase rate, a gauge of funding availability, climbed 34 basis points to 3.38 percent as of 11:36 a.m. in Shanghai, according to the National Interbank Funding Center. That’s the highest level since April 25.
“Tight liquidity will stay into month-end ahead” of the three-day holiday for the Dragon Boat Day festival starting June 10, according to Wee-Khoon Chong, a Societe Generale SA strategist in Hong Kong.
A total of 158 billion yuan of repurchase agreements and central bank bills are set to mature this week, which will temper gains in market rates, according to Frances Cheung, a strategist at Credit Agricole CIB in Hong Kong.
“The drainage from open-market operations wasn’t much, compared with the huge amount of maturing bills,” Cheung said. “The repo rate is not too tight.”
The seven-day repo rate rose one basis point, or 0.01 percentage point, to 4.39 percent. The one-year interest-rate swap, the fixed cost to receive the seven-day repurchase rate, climbed one basis point to 3.28 percent, data compiled by Bloomberg show.
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