China Money Rates Fall as Producer-Price Drop Fuels Easing Bets

China’s money-market rates fell and interest-rate swaps traded near a two-year low on speculation the central bank will ensure ample supply of funds to counter an economic slowdown.

Producer prices decreased for a record 32nd month in October, falling 2.2 percent, data showed today. Consumer prices increased 1.6 percent, matching September’s pace that was the slowest since January 2010. The world’s second-largest economy expanded 7.3 percent in the third quarter, the least since 2009.

The seven-day repurchase rate, a gauge of interbank funding availability, dropped three basis points, or 0.03 percentage point, to 3.15 percent as of 4:11 p.m. in Shanghai, a weighted average compiled by the National Interbank Funding Center shows. The one-year swap rate, the fixed payment to receive the floating seven-day repo rate, was steady at 2.940 percent, according to data compiled by Bloomberg. That’s near the two-year low of 2.935 percent reached Nov. 7.

“The PPI figure doesn’t look good, reflecting that the growth momentum continues to be weak,” said Li Haitao, a Shanghai-based analyst at China Guangfa Bank Co. “As inflation is low, and the expectation of relatively ample liquidity supply persists. Money rates are likely to be curbed.”

China’s exports rose 11.6 percent in October from a year earlier, slowing after September’s 15.3 percent gain, according to official figures released Nov. 8.

‘Not Scary’

President Xi Jinping said a growth rate of around 7 percent would still make China one of the world’s top economic performers in terms of both speed and size.

“Some worry whether China’s growth rate will slow down further, or whether China can overcome the obstacles -- risks are indeed there but they’re not that scary,” he told the Asia-Pacific Economic Cooperation CEO Summit in Beijing yesterday.

The nation’s top economic planner accelerated approvals for 693.3 billion yuan ($113 billion) of infrastructure projects, including 16 railways and five airports, China National Radio reported on Nov. 7.

Government bonds advanced, with the yield on debt due September 2024 declining two basis points to 3.55 percent, according to prices from the National Interbank Funding Center.

— With assistance by Helen Sun

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