May 28 (Bloomberg) -- China’s benchmark money-market rate fell the most in a month on speculation accelerated yuan gains will attract more capital inflows, boosting cash supply.
The People’s Bank of China issued 7 billion yuan ($1.1 billion) of three-month bills at a yield of 2.9089 percent, unchanged for a sixth sale, according to a trader required to bid at the auctions. The Chinese currency, which has risen 1.6 percent in the past three months, touched a 19-year high of 6.1210 per dollar yesterday.
“There are probably huge capital inflows, which are helping ease cash shortages,” said Wang Huane, a senior bond trader at Qilu Bank Co. in Jinan, capital of the eastern Shandong province.
The seven-day repurchase rate, which measures interbank funding availability, declined 55 basis points, or 0.55 percentage point, to 3.54 percent as of 4:30 p.m. in Shanghai, the biggest drop since April 28, according to a weighted average rate compiled by the National Interbank Funding Center.
The central bank also issued 12 billion yuan of 28-day repurchase contracts today to drain funds from markets.
The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, was unchanged at 3.28 percent, according to data compiled by Bloomberg.
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