China’s Overnight Money Rate Falls to 11-Month Low Before IPOs

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China’s money-market rate declined to the least in 11 months after the central bank guided interest rates lower before 30 initial public offerings of shares this week.

The monetary authority cut the rate on reverse-repurchase agreements that are used to lend money to banks four times since the start of March, most recently on April 7. Investors will place 2.73 trillion yuan ($439.2 billion) of orders for the new equity sales, a Bloomberg survey of six brokerages on April 3 showed. The People’s Bank of China extended 370 billion yuan of loans to banks via its medium-term lending program in the first quarter and another 170 billion yuan through a standing lending facility, according to a statement on its website April 10.

The overnight repurchase rate, a gauge of interbank funding availability, declined four basis points to 2.35 percent in Shanghai, the lowest since May, a weighted average compiled by the National Interbank Funding Center shows. The seven-day repo rate fell as much as five basis points to 2.85 percent, the lowest since Sept. 30, before trading little changed at 2.89 percent.

The PBOC’s “operations supplemented the liquidity shortfall, leading to lower funding rates,” said Qu Qing, a Beijing-based analyst at Huachuang Securities Co. “Looking forward, IPOs are likely to affect rates this week, and after that the quarterly payments of fiscal funds may drive up funding costs.”

China’s exports fell 14.6 percent in March from a year earlier in yuan terms, data from the customs department showed Monday. That compared with the median estimate for an 8.2 percent increase in a Bloomberg survey. Imports declined 12.3 percent, steeper than a projected 11.3 percent drop.

GDP Data

The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, rose two basis points to 3.11 percent, according to data compiled by Bloomberg. The yield on the December 2024 government bonds fell four basis points, or 0.04 percentage point, to 3.67 percent, prices from the National Interbank Funding Center show.

Official data Wednesday may show China’s gross domestic product increased 7 percent in the first quarter, according to the median estimate in a Bloomberg survey. That would be the slowest pace since the period to March 2009.

Policies may be taken to stabilize growth in the second quarter, as first-quarter growth could be less than 7 percent, according to an April 11 commentary published on the Xinhua News Agency-backed China Securities Journal’s front page.

Premier Li Keqiang said the economy is facing mounting pressure on his visit to the nation’s northwestern region, China Central Television reported on April 10.

— With assistance by Helen Sun

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