China Money Rate Drops for a Fourth Week as Cash Seen AdequateLilian Karunungan
China’s benchmark money-market rate fell for a fourth week on optimism policy makers will ensure ample funds in the financial system to aid economic growth.
A Chinese manufacturing gauge fell more than analysts estimated in August amid a credit slowdown and a property slump, data showed this week. The People’s Bank of China’s open-market operations resulted in a net injection of 11 billion yuan ($1.8 billion) this week, on top of the 14 billion yuan in the five days through Aug. 15, data compiled by Bloomberg show.
“Authorities would at least keep short-term interest rates low to support the economy,” Eugene Leow, a fixed-income strategist in Singapore at DBS Group Holdings Ltd., wrote in a report today. “The seven-day repo rate is therefore expected to remain in the 3 percent to 4 percent range, limiting any updrift in front-end yuan swap rates.”
The seven-day repurchase rate, a gauge of funding availability between banks, fell three basis points, or 0.03 percentage point, this week to 3.5 percent in Shanghai, according to a daily fixing from the National Interbank Funding Center. It was steady today.
One-year interest rate swaps, the fixed payment to receive the floating seven-day repurchase rate, rose one basis point today and four basis points from a week ago to 3.69 percent as of 4:33 p.m. in Shanghai, data compiled by Bloomberg show. The weak economic data has prompted speculation authorities will undertake more measures to boost growth, lifting short-tenor rates, said Leow.
The preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was 50.3, trailing all 22 estimates in a Bloomberg News survey of economists that had a median projection of 51.5. The measure dropped from July’s final reading of 51.7 and, if confirmed on Sept. 1, will be a three-month low. Numbers above 50 indicate expansion.
The yield on the 4 percent government bonds due June 2024 increased six basis points from Aug. 15 to 4.28 percent, according to prices from the National Interbank Funding Center.