China Money Rate Climbs to Five-Month High on Year-End Demand

Updated on
  • Central bank injects net 30 billion yuan into financial system
  • 10-year bonds extend advance withs yields lowest since 2009

China’s money-market rate climbed to the highest level in more than five months as banks stocked up on cash to meet year-end regulatory requirements and share sales soaked up funds.

Investors are placing orders for the initial public offerings of eight companies, with the biggest impact expected on Thursday when as much as 1.5 trillion yuan ($231 billion) of funds will be locked up, according to China International Capital Corp. Interbank money rates usually climb toward the year-end as lenders hoard funds for regulatory needs.

The 14-day repurchase rate, a gauge of interbank funding availability, rose nine basis points to 3.03 percent as of 4:36 p.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. That’s the highest level since July 6.

“Increasing demand for funds at the year-end is affecting the market, with large commercial banks scaling back lending in the interbank market,” said Guo Wei, an analyst at Bank of Nanjing Co.. “Still, this is just a marginal change from the very loose money conditions previously, and liquidity overall is pretty good.”

The People’s Bank of China injecteda net 30 billion yuan into the financial system this week, compared with 10 billion yuan in the previous period, according to data compiled by Bloomberg.

The yield on government bonds due October 2025 fell for the eighth day, declining two basis points to 2.82 percent, according to National Interbank Funding Center prices. That’s the lowest for a 10-year security since January 2009, ChinaBond data show.

The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, fell four basis points to 2.29 percent, the lowest since Oct. 28.

— With assistance by Helen Sun

Before it's here, it's on the Bloomberg Terminal. LEARN MORE