China Money Rate Declines to Two-Month Low as Cash Seen AdequateKyoungwha Kim
China’s benchmark money-market rate fell to a two-month low on speculation policy makers will ensure ample funds in the financial system to prevent an economic recovery from faltering.
New home prices fell from the previous month in 64 out of 70 cities in July, compared with 55 in June, official figures showed yesterday. That came after data last week revealed July’s aggregate financing was the least since 2008 while loan growth was the slowest in 4 1/2 years, countering a pickup in exports that drove the trade surplus to a record.
The seven-day repurchase rate, a gauge of interbank funding availability, dropped 10 basis points, or 0.10 percentage point, to 3.30 percent in Shanghai, according to a daily fixing from the National Interbank Funding Center. That’s the lowest level since June 19.
The drop in the repo rate “seems to suggest a relaxed market liquidity condition,” Zhou Hao, Shanghai-based strategist at Australia & New Zealand Banking Group Ltd., wrote in a research note. “The central bank appears to try to strike a balance between maintaining reasonable liquidity and lowering the cost of funds.”
The People’s Bank of China issued 30 billion yuan ($4.9 billion) of 14-day repurchase agreements at a yield of 3.7 percent today, according to a statement on its website.
The cost of one-year interest-rate swaps, the fixed payment needed to receive the floating seven-day repo rate, climbed one basis point to 3.66 percent, data compiled by Bloomberg show.
The yield on the 4 percent government notes due June 2024 was up two basis points at 4.26 percent, according to figures from the National Interbank Funding Center.