China Money Rate Climbs for a Third Day on Holiday Cash Demand

China’s money-market rate rose for a third day on speculation cash supply will decline as the Lunar New Year holiday approaches.

The People’s Bank of China conducted 43 billion yuan ($6.9 billion) of seven-day reverse-repurchase operations today, according to a trader required to bid at the auctions. The yield was kept unchanged at 3.35 percent, the trader said.

The seven-day repurchase rate, which measures interbank funding availability, climbed four basis points to 2.98 percent as of 4:30 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. The overnight rate dropped one basis point, or 0.01 percentage point, to 1.93 percent.

“Liquidity will probably become tight before the holiday,” said Wang Huane, a senior bond trader at Qilu Bank Co. in Jinan, the capital of eastern Shandong province. An overnight rate of close to 2 percent is “very rare” and “can’t last long,” she said.

The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repo rate, added six basis points to 3.20 percent, according to data compiled by Bloomberg. China’s financial markets will be shut from Feb. 11 to Feb. 15.

The yield on the 2.95 percent government bond due August 2017 dropped one basis point to 3.20 percent, according to the Interbank Funding Center.

— With assistance by Judy Chen

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