China Money Rate Climbs a Second Day as Cash Demand Set to Rise

China’s benchmark money-market rate climbed for a second day on speculation cash demand will rise before the Lunar New Year Holiday that starts Feb. 11.

The People’s Bank of China added 10 billion yuan ($1.6 billion) to the financial system today via 14-day reverse-repurchase operations, according to a trader required to bid at the auctions. The yield on the contracts has been kept unchanged at 3.45 percent since September. Local markets will be shut from Feb. 11 through Feb. 15 for the holiday.

“The loose liquidity won’t last long as the holiday draws near,” said Wang Huane, a senior bond trader at Qilu Bank Co. in Jinan, capital of the Shandong province.

The seven-day repurchase rate, which measures interbank funding availability, climbed six basis points, or 0.06 percentage point, to 2.81 percent as of 4:30 p.m. in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, dropped two basis points to 3.34 percent, according to data compiled by Bloomberg.

The yield on the 2.95 percent government bond due August 2017 fell one basis point to 3.24 percent, according to the Interbank Funding Center.

— With assistance by Judy Chen

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