China Money Rate Rises for First Time in Six Days as PBOC Drains

China’s benchmark money-market rate climbed for the first time in six days after the central bank’s weekly cash withdrawals rose to the highest in a month.

The People’s Bank of China drained 60 billion yuan ($9.6 billion) from the financial system today by selling 28-day repurchase contracts at a yield of 4 percent, leading to a net weekly outflow of the same amount. That was the biggest since the period to April 4. Data today showed China’s exports rebounded in April, which may help ease concern about slowing growth in Asia’s largest economy.

“There’s ample cash supply in the interbank market now, prompting the central bank to drain funds,” said Chen Long, a bond analyst at Bank of Dongguan Co. based in the city of the same name in southern China. “Still, the PBOC will consider the weak economy and won’t let the rates surge to a level that will further hurt funding needs.”

The seven-day repurchase rate, a gauge of interbank funding availability, rose 10 basis points, or 0.10 percentage point, to 3.20 percent as of 4:30 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. It slid 100 basis points in the last five days.

The central bank has been draining funds for three consecutive months on a net basis since the Lunar New Year holidays at the beginning of February apart from a net injection of 91 billion yuan last week.

China’s exports unexpectedly rose 0.9 percent in April from a year earlier, after contracting 6.6 percent in March, data from the Beijing-based customs administration showed today. The median forecast in a Bloomberg survey was for a 3 percent drop.

The cost of the one-year interest-rate swap, the fixed payment needed to receive the floating seven-day repo rate, fell three basis points to 3.66 percent, data compiled by Bloomberg show. The yield on the 4.42 percent government bonds due March 2024 fell 10 basis points to 4.21 percent, according to data from the National Interbank Funding Center.

A report from the statistics bureau tomorrow may show inflation eased to 2.1 percent in April, from 2.4 percent a month earlier, according to a Bloomberg News survey.

— With assistance by Helen Sun

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