China Swaps Completes First Weekly Gain in Three on Zhou Remarks

China’s key interest-rate swaps completed their first weekly increase in three after central bank governor Zhou Xiaochuan indicated he would avoid using large-scale stimulus measures to shore up the economy.

The People’s Bank of China is always fine-tuning its policies and some of that is invisible to the market, Zhou said in remarks published on the website on May 10. The monetary authority injected a net 44 billion yuan ($7 billion) into the financial system this week.

One-year interest-rate swaps, the fixed payment to receive the floating seven-day repurchase rate, rose 11 basis points this week to 3.74 percent in Shanghai, data compiled by Bloomberg show. The rate fell one basis point today.

“We are seeing some paying pressure on the back of Zhou’s comments that he won’t deploy any big stimulus easily,” said Wee-Khoon Chong, Singapore-based head of rates strategy for Asia ex-Japan at Nomura Holdings Inc. “I don’t think such a move up will last and like to use upticks to receive rates.”

The seven-day repurchase rate, a gauge of funding availability, declined seven basis points this week to 3.10 percent, according to a weighted average from the National Interbank Funding Center. It fell three basis points today.

Ten-year government bonds yielded 4.20 percent, down three basis points, or 0.03 percentage point, from yesterday and up eight basis points from May 9, data from the National Interbank Funding Center shows. The weekly increase was the first since the five days ended April 11.

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