China Money Rate Drops for a Fourth Week as Cash Seen Adequate

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.

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