China Money Rate Gains Most in Two Weeks on Debt Rollover Bet

China’s benchmark money-market rate climbed the most in almost two weeks amid speculation the central bank will roll over some three-year debt maturing today.

The People’s Bank of China asked lenders to submit orders for seven- and 14-day reverse-repurchase agreements and 28-day repurchase contracts, according to a trader at a primary dealer required to bid at the auctions. The monetary authority rolled over some maturing three-year notes on Aug. 12 and Aug. 26.

“The market speculation is that the central bank will again roll over some of the maturing three-year notes this week,” said Cheng Qingsheng, an analyst at Evergrowing Bank Co. in Shanghai. “In the meantime, commercial banks are cautious in lending out as they prepare for the upcoming holidays and quarter-end cash demand.”

The seven-day repo rate, a gauge of funding availability in the banking system, rose nine basis points to 3.56 percent as of 3:49 p.m. in Shanghai, a weighted average compiled by the National Interbank Funding Center showed. The rate advanced as much as 13 basis points, the most since Aug. 27, to 3.60 percent earlier.

The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, added three basis point, or 0.03 percentage point, to 4.12 percent, data compiled by Bloomberg show.

China’s export growth picked up by a more-than-estimated 7.2 percent in August, data from the customs department showed yesterday. Consumer prices accelerated 2.6 percent in August, staying below the government’s target of 3.5 percent.

The yield on the government’s 4.08 percent bonds due August 2023 was unchanged at 4.08 percent, according to prices from the Interbank Funding Center.

— With assistance by Helen Sun

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