China’s money-market rate had its biggest weekly gain in two months on speculation demand for cash will increase as the end of the quarter approaches.
The seven-day repurchase rate, a gauge of interbank funding availability, rose for a fourth day even after the central bank lowered the yields on 28- and 91-day repurchase contracts this week. The finance ministry sold 15 billion yuan ($2.4 billion) of 273-day bills at an average yield of 2.27 percent, according to a trader at a finance company that participates in government debt auctions. That compared with the 2.20 percent rate on similar-maturity securities in the secondary market.
“Banks may need more money to boost their loan-to-deposit ratios to meet quarter-end requirements,” said Guo Caomin, a bond analyst at Industrial Bank Co. in Shanghai. “The high auction yield on short-term debt shows cash supply is getting tight.”
The seven-day repurchase rate increased 27 basis points this week to 2.73 percent as of 4:30 p.m. in Shanghai, the biggest increase since the five days through April 6, according to a weighted average compiled by the National Interbank Funding Center. The rate rose three basis points, or 0.03 percentage point, today.
The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, climbed 19 basis points for the week to 2.58 percent, according to data compiled by Bloomberg. The rate rose one basis point today.
The central bank sold 91-day repurchase agreements yesterday at 3.05 percent, from 3.14 percent a week ago, according to a statement on its website. It cut the rate on 28-day repos by five basis points to 2.75 percent on June 12.
The yield on the 3.14 percent government bonds due February 2017 rose 14 basis points this week to 2.91 percent, according to the Interbank Funding Center. The rate dropped one basis point today.