China Money Rate Rises Most in Six Weeks as Companies Pay Tax

China’s benchmark money-market rate climbed the most in six weeks on speculation cash supply will tighten as local companies pay tax this month.

The People’s Bank of China auctioned 10 billion yuan ($1.6 billion) of 28-day repurchase contracts today, according to a trader required to bid at the sales. The preliminary reading of a Purchasing Managers’ Index was 50.5 in April, compared with a final 51.6 for March, according to data released today by HSBC Holdings Plc and Markit Economics.

“The increase in the seven-day repo is more the effect of tax payments,” said Pin Ru Tan, a Hong Kong-based strategist at HSBC Securities Asia Ltd. “Local companies pay tax every quarter. For the second quarter, the tax payment is in April.”

The seven-day repurchase rate, which measures interbank funding availability, increased 48 basis points, or 0.48 percentage point, to 3.64 percent as of 4:02 p.m. in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center. Today’s gain was the biggest since March 11.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, was unchanged at 3.29 percent, according to data compiled by Bloomberg.

— With assistance by Judy Chen

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