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China Money Rate Rises to Three-Month High After Holiday

Oct. 8 (Bloomberg) -- China’s benchmark money-market rate rose to a two-month high as the central bank injected cash into the financial system after a week-long holiday.

The People’s Bank of China sold 65 billion yuan ($11 billion) of seven-day reverse-repurchase agreements at 3.9 percent today, according to a statement on its website. The authority added a net 150.1 billion yuan in the week ended Sept. 27 to stabilize rates and help banks meet quarter-end funding demand before the Oct. 1-7 National Day holidays.

“Money-market rates are likely to be high in early and late October, and dip in the middle,” said Zuo Junyi, an analyst at Founder Securities Co. in Beijing. “Commercial banks were trying to find money for the usual reserve payments delayed to today because of the holiday, while new issuance of government bonds and 80 billion yuan of reverse repos maturing this week also helped to tighten the market.”

The seven-day repo rate, a gauge of funding availability in the banking system, rose 16 basis points, or 0.16 percentage point, to 4.41 percent, according to a weighted average compiled by the National Interbank Funding Center. It touched 4.7 percent earlier, the highest since Aug. 1.

The overnight repo rate fell five basis points to 3.1 percent, data compiled by Bloomberg show. The cost of the one-year interest-rate swap, the fixed payment to receive the floating seven-day repo rate, was steady at 3.98 percent.

The yield on the government’s 4.08 percent bonds due August 2023 fell one basis point to 4.02 percent, according to data provided by the Interbank Funding Center.

A service industries Purchasing Managers’ Index for September stood at 52.4, versus 52.8 in August, according to a report by HSBC Holdings Plc and Markit Economics today. China shouldn’t overly expand its fiscal deficit and credit to spur short-term growth, according to a Securities Daily commentary today by Yi Xianrong, a researcher at the Chinese Academy of Social Sciences.

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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