China’s benchmark money-market rate climbed by the most in two weeks as corporate tax payments and demand for credit ate up cash.
Commercial banks need to park companies’ taxes with the monetary authority in the month after the quarter-end. Loan growth and aggregate financing in June both exceeded the median estimates in Bloomberg surveys, adding to signs the economy is stabilizing. A Conference Board report on Wednesday showed an index of China’s leading economic indicators climbed 1 percent in June, following increases of 1.1 percent in May and April’s 1.5 percent.
The seven-day repurchase rate, a measure of interbank funding availability, rose for a third day, adding five basis points to 2.49 percent as of 4:30 p.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. The rate averaged 2.53 percent this month, below 3.25 percent for 2015.
“The economic fundamentals are turning better and financing demand is reviving,” said Yan Yan, a Shanghai-based analyst at China Guangfa Bank Co. “It will be difficult for interbank liquidity to become looser.”
The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, climbed four basis points to 2.56 percent, after rising six basis points Tuesday, according to data compiled by Bloomberg. The 10-year government bond yield was steady at 3.53 percent, prices from the National Interbank Funding Center show.
The Ministry of Finance sold 30 billion yuan of five-year sovereign notes at a yield of 3.11 percent Wednesday, according to statements at China Central Depository & Clearing Co. on the website. That compared with 3.18 percent in the secondary market on Tuesday, ChinaBond data show.
— With assistance by Helen Sun