China Overnight Rate Set for Biggest Weekly Increase in 3 Months
China’s overnight money-market rate climbed the most since October this week on speculation cash at banks will drop as customer withdrawals increase before the weeklong Lunar New Year holiday starting Feb. 11.
The one-day repurchase rate, a gauge of interbank funding availability, jumped the most this month today even after the central bank added money into the financial system to help ease the fund squeeze. The People’s Bank of China pumped in 59 billion yuan ($9.5 billion) this week, the first injection in 2013, according to data compiled by Bloomberg.
“If the central bank doesn’t inject more capital, liquidity will become tighter next week,” said Song Qiuhong, a bond analyst at Foshan Shunde Rural Commercial Bank Co. in Foshan, a city in the southern province of Guangdong.
The one-day repo rate climbed 55 basis points, or 0.55 percentage point, this week to 2.66 percent as of 10:07 a.m. in Shanghai, the biggest increase since the five days ended Oct. 26, according to a weighted average compiled by the National Interbank Funding Center. It’s surged 34 basis points today.
The one-year swap rate, the fixed cost needed to receive the floating seven-day repurchase rate, rose one basis point today and this week to 3.18 percent, according to data compiled by Bloomberg.
The yield on the 3.15 percent government bond due January 2018 increased two basis points this week to 3.26 percent, according to the Interbank Funding Center. It decreased one basis point today.