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China Overnight Money Rate Rises Most This Month Before Holiday

China’s overnight money-market rate rose the most this month on speculation cash at banks will drop as customer withdrawals increase before the weeklong Lunar New Year holiday that starts Feb. 11.

The one-day repurchase rate, a gauge of interbank funding availability, climbed to a three-week high even after the central bank added money into the financial system to help ease the fund squeeze. The People’s Bank of China released 59 billion yuan ($9.5 billion) this week, the first injection in 2013.

“Banks have to prepare enough cash for holiday withdrawal demand,” said Liu Junyu, a bond analyst in Shenzhen at China Merchants Bank Co., the nation’s sixth-biggest lender. “There may be a bit of shortage next week.”

The one-day repo rate jumped 21 basis points, or 0.21 percentage point, to 2.31 percent as of 4:30 p.m. in Shanghai, the biggest increase since Dec. 31, according to a weighted average compiled by the National Interbank Funding Center. It’s dropped 1.54 percentage points this month.

The central bank today issued 100 billion yuan of seven-day reverse-repurchase contracts at 3.35 percent, according to a trader required to bid at the auctions. The yield was unchanged from the last offering.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, dropped two basis points to 3.17 percent, according to data compiled by Bloomberg. It’s fallen 17 basis points this month.

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