China Money-Market Rate Drops Seventh Day as New Loans Decline

Jan. 10 (Bloomberg) -- China’s money-market rate dropped for a seventh day, the longest run of declines since May, after data showed local-currency loans fell more than economists forecast last month.

New lending was 454.3 billion yuan ($73 billion), according to the People’s Bank of China, compared with the median estimate of 550 billion yuan in a Bloomberg News survey of 37 analysts and December 2011’s 640.5 billion yuan. The central bank offered 15 billion yuan of seven-day reverse-repurchase agreements today at a yield of 3.35 percent and 40 billion yuan of 14-day contracts at 3.45 percent, it said in a statement on its website.

“The lending data has contributed to the downward trend,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. “The smaller amount of new loans that are extended, the less cash banks are forced to put aside as required reserves, which leaves more funds in the interbank market and pressures money-market rates down.”

The seven-day repurchase rate, a gauge of interbank funding availability in the banking system, fell seven basis points to 2.92 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center.

China’s exports rose 14.1 percent in December from a year earlier, while imports climbed 6 percent, leaving a trade surplus of $31.6 billion, the customs administration reported today in Beijing. The pickup in shipments compares with the 5 percent median estimate of 40 economists in a Bloomberg News survey and a 2.9 percent increase the previous month.

The one-year interest-rate swap, the fixed cost to receive the seven-day repo rate, rose three basis points, or 0.03 percentage point, to 3.38 percent in Shanghai, according to data compiled by Bloomberg.

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