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China Benchmark Money Rate Rises First Time in Five Days

Aug. 12 (Bloomberg) -- China’s benchmark money-market rate rose for the first time in five days after the central bank reduced net cash injections last week.

The People’s bank of China added 20 billion yuan ($3.3 billion) to the financial system in the week ended Aug. 9, compared with 136 billion yuan the previous week, data compiled by Bloomberg show. The PBOC gauged demand for sales of 91-day bills planned for this week, said a trader at a primary dealer required to bid at the auctions. It also asked lenders to submit orders for 28-day repurchase agreements and seven- and 14-day reverse-repurchase contracts, the trader said.

The seven-day repurchase rate, which measures interbank funding availability, climbed three basis point, or 0.03 percentage point, to 3.68 percent as of 4:30 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. It slid 68 basis points last week.

“Current monetary policy is basically tighter than last year’s,” said Li Yiming, an analyst with Citic Securities Co. in Beijing. “The seven-day repo is more likely to trade within the range of between 3.5 percent and 3.8 percent, rather than falling further, as guided by the PBOC’s reverse-repo rates.”

The central bank issued seven-day reverse-repurchase contracts at 4 percent on Aug. 6, and 14-day reverse repos at 4.1 percent on Aug. 8, both 40 basis points lower than those at the previous week’s auctions.

The one-year interest-rate swap contract, the fixed cost needed to receive the floating seven-day repo rate, added three basis points to 3.91 percent, according to data compiled by Bloomberg.

The yield on the 3.38 percent government bonds due May 2023 rose two basis points to 3.88 percent, the highest level since June 20, according to the Interbank Funding Center.

To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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