China Money Rate Touches a Two-Week High Before Holidays

China’s benchmark money-market rate climbed to a two-week high as demand for cash increased ahead of local holidays.

The People’s Bank of China pumped 8 billion yuan ($1.3 billion) into markets yesterday via seven-day reverse-repurchase agreements to help boost fund supply. Chinese markets will close on Sept. 19 and 20 for the mid-Autumn festival and Oct. 1 to 7 for National Day holidays.

“We’ll probably see the money market remain in a tight balance,” said Li Yiming, an analyst at Citic Securities Co. in Beijing. “After the June experience, banks know how to increase reserves to prepare for quarter-end cash demand.”

The seven-day repurchase rate, a gauge of funding availability in the banking system, rose five basis points, or 0.05 basis point, to 3.71 percent as of 10:50 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. The rate touched 3.74 percent earlier, the highest since Sept. 3.

The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, was steady at 4.03 percent, according to data compiled by Bloomberg.

The central bank drained a net 1.1 billion yuan from the financial system last week, following a withdrawal of 37 billion yuan in the previous period.

The yield on the 4.08 percent sovereign debt due August 2023 declined one basis point to 4.08 percent, according to prices from the Interbank Funding Center.

To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.