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Swaps Drop Most Since ‘08 as More Easing Forecast: China Credit

The cost of locking in China’s interest rates for two years is falling at the fastest pace since 2008 as cash injections by the central bank add to signs monetary policy is being relaxed to support economic growth.

The two-year swap, the fixed payment that can be exchanged for the floating seven-day repurchase rate, tumbled 30 basis points last week to 3.26 percent, the biggest decline since November 2008, according to data compiled by Bloomberg. That’s the lowest level this year and less than half the rates for similar-term contracts in Brazil, Russia and India. HSBC Holdings Plc recommends investors receive China’s two-year swap rate, predicting it will slip to 3.15 percent by end-December.