PBOC Conducts First Reverse Repos Since February; Swaps Decline

China’s central bank conducted reverse-repurchase operations for the first time in five months, helping alleviate a cash squeeze that drove the benchmark interbank lending rate to a four-week high.

The People’s Bank of China added 17 billion yuan ($2.8 billion) to the financial system today at a yield of 4.4 percent using seven-day reverse repos. That compares with 3.35 percent when the contracts were last issued on Jan. 31 and 3.45 percent at a Feb. 7 auction of 14-day agreements, according to central bank data compiled by Bloomberg. Interest-rate swaps and money-market rates declined, while China’s stocks rose.