China Repo Rate Rises for Fourth Day as Bill Redemptions Drop

China’s money-market rate rose for a fourth day on speculation cash supply will dwindle as debt redemptions decline this week.

No central bank bills are due this week, compared with 85 billion yuan ($14 billion) maturing next week, according to data compiled by Bloomberg. Yuan positions at Chinese financial institutions accumulated from sales of foreign exchange declined 41.2 billion yuan in June, the first drop in seven months, the People’s Bank of China reported yesterday.

“The market is already tighter heading into this week as there are no PBOC bills scheduled to mature,” said Pin Ru Tan, an interest-rate strategist at HSBC Securities Asia Ltd. in Hong Kong. “Further, there is a possibility there was some temporary liquidity assistance given in late June to selected banks that has to be repaid this week.”

The seven-day repurchase rate, which measures interbank funding availability, gained seven basis points, or 0.07 percentage point, to 4 percent as of 4:30 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center.

The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repurchase rate, dropped one basis point to 4.12 percent, according to data compiled by Bloomberg. The rate touched 4.18 percent earlier, the highest since June 25.

The PBOC didn’t drain or add funds via repurchase operations today, according to a trader at a primary dealer required to bid at the auctions.

Gross domestic product climbed 7.5 percent in the second quarter, compared with 7.7 percent in the previous three months, the statistics bureau said on July 15. Premier Li Keqiang said China’s “bottom line” for GDP gains is 7 percent and the nation can’t let growth go below that, Beijing News reported today, citing comments at a recent meeting with economists and business people.

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