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China’s Money Rate Jumps Most in a Month as Banks Hoard Cash

Pedestrians walk past the People's Bank of China in Beijing, China. Photographer: Nelson Ching/Bloomberg
Pedestrians walk past the People's Bank of China in Beijing, China. Photographer: Nelson Ching/Bloomberg

China’s benchmark money-market rate rose the most in more than a month on speculation banks are boosting capital to meet regulatory requirements as the quarter-end approaches.

The People’s Bank of China didn’t gauge demand for bill sales today and asked banks to submit orders for 28- and 91-day repurchase contracts this morning, according to a trader who takes part in the auctions and didn’t want to be identified because the information isn’t public. The central bank boosted rural credit by cutting reserve-requirement ratios last week for an additional 379 branches of Agricultural Bank of China Ltd., the nation’s third-biggest lender by market value.

“Banks are still hoarding cash and are reluctant to lend,” said Frances Cheung, a Hong Kong-based senior strategist at Credit Agricole SA. “The Agricultural Bank’s case shows the central bank still prefers relaxing credit selectively to small and medium-sized enterprises.”

The seven-day repurchase rate, which measures interbank funding availability, climbed 33 basis points to 3.30 percent as of 4:53 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. That’s the biggest increase since Feb. 23.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repo rate, declined three basis points, or 0.03 percentage point, to 3.17 percent, according to data compiled by Bloomberg.

The yield on the 3.99 percent government bonds due June 2021 was little changed at 3.53 percent, according to the Interbank Funding Center.

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