China Money Rate Hits Three-Week Low as PBOC Adds Cash

China’s benchmark money-market rate fell to a three-week low as the central bank added funds to the financial system using reverse-repurchase operations. Government bonds declined after better-than-expected trade data.

The People’s Bank of China injected 15 billion yuan ($2.45 billion) today by auctioning 14-day reverse repos at 4.1 percent, according to a statement on its website. The rate was 40 basis points lower than when the contracts were last auctioned a week ago. The monetary authority conducted seven-day reverse repos on Aug. 6 at a yield of 4 percent, down from 4.4 percent a week earlier when the contracts were used in open-market operations for the first time since January.

“The central bank again guided the rate lower, reaffirming its intention to the market,” said Guo Caomin, a bond analyst at Industrial Bank Co. in Shanghai. “However, the reverse-repo amount is not so big, so the downside for rates should be limited in the near term.”

The seven-day repurchase rate, a gauge of cash availability in the banking system, slid 10 basis points, or 0.10 percentage point, to 3.79 percent, according to a weighted average compiled by the National Interbank Funding Center. It touched 3.55 percent, the lowest level since July 18.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repo rate, was unchanged at 3.87 percent in Shanghai, according to data compiled by Bloomberg. It earlier fell as much as two basis points.

The central bank’s money-market operations injected a net 20 billion yuan this week, according to data compiled by Bloomberg. That compares with 136 billion yuan in the five days ended Aug. 2.

The yield on the government’s 3.38 percent bonds due May 2023 climbed eight basis points to a seven-week high of 3.87 percent, according to prices from the Interbank Funding Center.

China’s exports climbed 5.1 percent in July from a year earlier following a 3.1 percent drop in June, data showed today. Economists expected 2 percent growth, based on the median estimate in a Bloomberg survey.

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