China’s benchmark money-market rate rose for a second day on speculation cash supply will wane as corporate tax payments loom and a public holiday approaches.
Companies need to pay about 400 billion yuan ($64.7 billion) to 500 billion yuan in total annual taxes before the end of this month, according to Chen Qi, a strategist with UBS Securities Co. in Shanghai. Domestic financial markets are closed for three days from March 29.
“There are expectations for slight tightening in the money-market rates ahead of the holiday and month-end tax payments,” Chen said. Still, liquidity is not tight given more capital inflows from overseas, she added.
The seven-day repurchase rate climbed five basis points to 3.16 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. The one-year interest-rate swap, the fixed cost to receive the seven-day repo, rose three basis points to 3.29 percent, data compiled by Bloomberg show.
The People’s Bank of China gauged demand for 28-day repurchase agreements and seven- and 14-day reverse-repurchase contracts this morning, according to a trader at a primary dealer required to bid at the auctions. The two operations would add or drain funds from the banking system.
The yield on 3.15 percent government bonds due January 2018 was little changed at 3.20 percent, according to the National International Funding Center.