China’s 14-day money-market rate climbed to a three-week high on speculation lenders are hoarding cash to meet month-end requirements and after the central bank drained funds from the financial system.
The People’s Bank of China pulled a net 14 billion yuan ($2.3 billion) of capital from markets this week, a ninth weekly withdrawal, according to data compiled by Bloomberg. China’s financial markets will be shut from April 29 to May 1 for the Labor Day holiday.
“Banks are busy borrowing money to meet month-end requirements,” said Liu Junyu, a bond analyst in Shenzhen at China Merchants Bank Co., the nation’s sixth-biggest lender.
The 14-day repurchase rate, which measures interbank funding availability, gained 11 basis points to 3.53 percent as of 4:55 p.m. in Shanghai, the highest level since March 29, according to a weighted average rate compiled by the National Interbank Funding Center. It rose 43 basis points this week.
The government issued 26 billion yuan of 20-year bonds at a yield of 3.99 percent today, according to a trader at a finance company that participates in government debt auctions.
The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, climbed three basis points to 3.26 percent, the biggest increase since March 11, according to data compiled by Bloomberg. The rate was unchanged this week.
The Shanghai interbank offered rate, or Shibor, for one-month yuan loans climbed 46 basis points, the biggest jump since Feb. 26, to 3.80 percent, according to the National Interbank Funding Center. The rate rose 56 basis points this week.