China Money-Market Rate Drops in Week as PBOC Injects More Cash

China’s benchmark money-market rate completed a weekly decline after the central bank stepped up fund injections into the financial system.

The People’s Bank of China added a net 59 billion ($9.7 billion) this week, the most since the week ended Sept. 27, after withdrawing money in the two preceding periods, according to data compiled by Bloomberg. It offered 14-day reverse-repurchase contracts yesterday for the first time this month, pumping in 33 billion yuan into the financial system, the largest amount since October.

The seven-day repurchase rate, a gauge of funding availability in the banking system, fell 56 basis points, or 0.56 percentage point, in the week to 4.88 percent as of 4:18 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. It declined two basis points today.

“While liquidity might ease in December as government spending picks up, seasonal patterns suggest further episodes of tighter liquidity at end-December and then again at end-January heading into the Chinese New Year holidays,” Citigroup Inc.’s Singapore-based analysts Gaurav Garg and Siddharth Mathur wrote in a research report yesterday.

China’s central government usually transfers fiscal funds to local administrations during November and December, boosting cash available at commercial banks.

The cost of one-year interest-rate swaps, the fixed payment needed to receive the floating seven-day repo rate, dropped six basis points this week to 4.45 percent, according to data compiled by Bloomberg. It fell 13 basis points today.

The yield on the 4.08 percent government bonds due August 2023 slipped five basis points today to 4.65 percent, according to data from the Interbank Funding Center. The rate climbed five basis points from a week ago.

— With assistance by Helen Sun

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