China Swap Rate Rises to Six-Month High as Exports Top Estimates

China’s interest-rate swap rose to a six-month high as a bigger-than-expected jump in exports reduced prospects for monetary easing.

Overseas sales surged 48 percent from a year earlier in February, exceeding the median estimate of 14 percent in a Bloomberg survey. Together with January, shipments rose 15 percent, outpacing the 6 percent trade growth the government is targeting for 2015. The central bank cut its benchmark interest rates on March 1 for the second time in three months, and in February relaxed reserve requirements for all banks for the first time since 2012.

“Recently the economy is showing some stabilizing signs,” said Ren Zeping, a Beijing-based strategist at Guotai Junan Securities Co. “The most pessimistic period is probably over. However, rates remain at elevated levels which mean the interest-rate cut isn’t enough, so we expect another reserve-ratio cut.”

One-year swaps, the fixed payment to receive the floating seven-day repurchase rate, rose six basis points to 3.67 percent as of 4:45 p.m. in Shanghai, data compiled by Bloomberg show. It reached 3.70 percent earlier, the highest since August. The seven-day repo rate, a gauge of interbank funding availability, fell two basis points to 4.75 percent, based on a weighted average from the National Interbank Funding Center.

The Ministry of Finance has approved a 1 trillion yuan ($160 billion) quota that allows municipal authorities to convert some high-cost maturing debt into local government bonds, according to a statement released Sunday. The proposal “solved the eyebrow burning urgency” that local governments face to refinance, former head of the finance ministry’s research institute Jia Kang said the same day.

The yield on China’s sovereign bonds due September 2024 increased three basis points to 3.54 percent, according to National Interbank Funding Center prices. That’s the highest since Jan. 15.

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