China Money Rate Completes Longest Rising Streak in 10 Months

China’s overnight money-market rate rose for a sixth day, the longest run of increases in 10 months, as holiday demand and new share sales sapped the supply of cash.

The overnight repurchase rate, a gauge of interbank funding availability, climbed two basis points to 2.95 percent in Shanghai, a weighted average from the National Interbank Funding Center shows. It has advanced 29 basis points, or 0.29 percentage point, since Jan. 27.

The People’s Bank of China sold 35 billion yuan ($5.6 billion) of seven-day reverse-repurchase agreements at 3.85 percent and 55 billion yuan of 28-day contracts at 4.8 percent Tuesday. That followed net injections of 105 billion yuan into the banking system in the last two weeks. As much as 1.8 trillion yuan will be locked up by subscriptions for new share sales that start Feb. 9, according to an estimate by SWS Research Ltd.

“There will be heavy pressure on money markets next week as IPOs freeze funds,” said Xu Hanfei, a Shanghai-based analyst at Guotai Junan Securities Co. “The PBOC injections so far don’t meet expectations, and the market should be wary of liquidity risks.”

The central bank injected a net 450 billion yuan in open-market operations in the two weeks leading up to Lunar New Year in 2014. The holidays start on Feb. 18 this year.

The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, was steady at 3.36 percent, data compiled by Bloomberg show.

Services Slowdown

A gauge of China’s services industry expanded at the weakest pace in six months in January. The Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics for January was at 51.8, down from 53.4 a month earlier.

The yield on Chinese sovereign bonds due September 2024 fell one basis point to 3.46 percent, according to National Interbank Funding Center prices.

The Ministry of Finance auctioned 20 billion yuan of five-year bonds at 3.31 percent Wednesday, according to a statement on the China Central Depository & Clearing Co. website. That compared with the median estimate of 3.37 percent in a Bloomberg News survey Tuesday.

— With assistance by Helen Sun

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