China’s benchmark money-market rate fell to the lowest level in almost a month as the central bank added cash to the banking system for a fourth week.
The People’s Bank of China auctioned 40 billion yuan ($6.4 billion) of 28-day repurchase agreements at a yield of 4 percent today, according to a statement on its website. That takes net injections to 73 billion yuan in the week through today, data compiled by Bloomberg show.
The seven-day repurchase rate, a gauge of interbank funding availability, fell nine basis points, or 0.09 percentage point, to 3.07 percent as of 4:43 p.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. The rate declined to 3.06 percent earlier, the lowest level since May 6, and has dropped 17 basis points since May 29.
“The rates market appears quite balanced at this moment,” said Zhou Hao, a Shanghai-based economist at Australia & New Zealand Banking Group Ltd. “While the cash crunch is unlikely to repeat this year, the commercial banks are still a bit cautious on the liquidity outlook toward the end of the second quarter.”
A crackdown on off-balance sheet lending combined with quarter-end cash demand pushed the repo rate’s daily fixing to a record 10.77 percent on June 20, 2013.
The cost of one-year interest-rate swaps, the fixed payment needed to receive the floating seven-day repo rate, rose six basis points to 3.49 percent today, data compiled by Bloomberg show.
China’s services Purchasing Managers’ Index fell to 50.7 in May from 51.4 a month earlier, according to data released today by HSBC Holdings Plc and Markit Economics. That was the lowest reading since January. The “slight disappointment” suggests growth momentum remains slow and private sector sentiment is weak, Qu Hongbin, a Hong Kong-based HSBC economist, said in an accompanying statement.
The yield on the 4.42 percent government bonds due March 2024 rose two basis points to 4.07 percent, data from the National Interbank Funding Center shows. The rate on benchmark 10-year debt dropped to 4.01 percent yesterday, the lowest since October, according to ChinaBond data.
To contact Bloomberg News staff for this story: Helen Sun in Shanghai at email@example.com
To contact the editors responsible for this story: James Regan at firstname.lastname@example.org Andrew Janes