China’s money-market rate had its first weekly gain since October on speculation banks are hoarding cash to meet month-end capital requirements.
The People’s Bank of China drained 40 billion yuan ($6.4 billion) of capital from the financial market this week, according to data compiled by Bloomberg. A government-backed report due tomorrow may show manufacturing increased for a second month. The Purchasing Managers’ Index climbed to 50.8 in November from 50.2 in October, according to the median estimate in a Bloomberg News survey. Fifty is the dividing line between expansion and contraction.
The seven-day repurchase rate, which measures interbank funding availability, rose 54 basis points this week to 3.38 percent in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center. The rate climbed four basis points today and 15 basis points, or 0.15 percentage point, in November.
“The month-end effect is pushing up the rates,” said Liu Junyu, a bond analyst in Shenzhen at China Merchants Bank Co., the nation’s sixth-biggest lender. “But due to the central bank’s continued reverse-repo offerings, the market isn’t that nervous.”
The central bank offered 214 billion yuan of reverse-repurchase contracts this week.
The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, advanced eight basis points in the week to 3.41 percent, according to data compiled by Bloomberg. The rate was unchanged today and gained 21 basis points this month.
The yield on the 2.91 percent government bonds due April 2015 climbed three basis points this week to 3.09 percent, according to the Interbank Funding Center. It gained one basis point today and rose four basis points in November.