China Swaps Near 10-Week High on Risk of Further Tightening
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China’s one-year swap rate was near a 10-week high on speculation further monetary tightening is planned after this year’s fifth increase in reserve-ratio requirements takes effect tomorrow. The yuan was little changed.
Major lenders’ reserve ratios will rise to 21 percent tomorrow, from 20.5 percent, and that’s curbing the availability of cash in the financial system. In addition to reining in lending, policy makers have also increased benchmark interest rates twice this year to help tame the fastest inflation in almost three years. Consumer-price gains of 5.4 percent in March and 5.3 percent in April were the biggest since July 2008 and exceed the government’s goal of limiting increases to 4 percent.