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China Money Rate Rises Most in July on Reverse Repo Redemptions

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July 17 (Bloomberg) -- China’s overnight money-market rate rose by the most this month on speculation cash supply will wane because of reverse-repurchase contract redemptions.

A total of 205 billion yuan ($32.2 billion) of reverse repos come due this week, while 45 billion yuan will be added to the market through maturing securities, according to Societe Generale SA. The People’s Bank of China offered seven-day reverse repos at a yield of 3.3 percent today, unchanged from the last auction on July 12, according to a statement on its website.

“The one-day market rate is a bit tighter because of the maturity of the reverse repos,” said Pin Ru Tan, a rates strategist at HSBC Holdings Plc in Hong Kong.

The overnight repurchase rate, which measures interbank funding availability, climbed 17 basis points to 2.64 percent as of 5:02 p.m. in Shanghai, the biggest gain since June 26, according to a weighted average compiled by the National Interbank Funding Center.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, rose five basis points, or 0.05 percentage point, to 2.50 percent, the biggest increase since June 19, according to data compiled by Bloomberg.

The yield on the 3.51 percent government bonds due February 2022 climbed one basis point to 3.27 percent, according to the Interbank Funding Center.

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.

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