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China One-Year Swap Rises for Second Day on U.S. Recovery Signs

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March 14 (Bloomberg) -- China’s one-year interest-rate swap climbed for a second day on speculation the U.S. economic recovery will bolster demand for exports, lessening the need for monetary easing in Asia’s biggest economy.

The Federal Reserve said yesterday it expects “moderate economic growth” and predicted the unemployment rate will decline gradually. U.S. retail sales rose 1.1 percent in February, the biggest increase in five months, figures showed. China’s overseas sales climbed 18.4 percent in February after a 0.5 percent slide in January, the customs bureau said March 11.

“The good news from the U.S. is helping boost risk appetite in the swap market,” said Guo Caomin, a bond analyst at Industrial Bank Co. in Shanghai.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, rose three basis points to 3.18 percent as of 4:30 p.m. in Shanghai, according to data compiled by Bloomberg. The repo rate, which measures interbank funding availability, was unchanged at 3 percent in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center.

The People’s Bank of China didn’t gauge demand for bill sales today, a sign it won’t resume sales tomorrow, according to a trader at a primary dealer required to bid at the auctions. The monetary authority has refrained from issuing three- and 12-month bills this year to help ease a cash crunch in the banking system.

The yield on the 3.99 percent government bond due January 2021 gained six basis points to 3.54 percent, according to the Interbank Funding Center. A basis point is 0.01 percentage point.

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at xchen45@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.