Bloomberg News

China’s Money-Market Rate Drops to Seven-Week Low as Cash Rises

October 12, 2011

Oct. 12 (Bloomberg) -- China’s benchmark money-market rate dropped to a seven-week low as policy makers added cash to the financial system and demand for funds declined after last week’s public holidays.

The People’s Bank of China injected funds into banks for an 11th week in the five-day period through Sept. 29 before financial markets shut last week for the National Day holidays, according to data compiled by Bloomberg. The central bank kept the yield on one-year bills unchanged at an auction yesterday.

“The availability of money is relatively good after the central bank’s fund injections,” said Yiming Li, Beijing-based interest-rate strategist at BOCI Securities Ltd., a unit of Bank of China Ltd. “I don’t think the pressure on the central bank to ease monetary policy is too big.”

The seven-day repurchase rate, a gauge of funding availability in the financial system, fell 86 basis points, or 0.86 percentage point, to 3.34 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. The rate touched 3.2 percent earlier, the lowest level since Aug. 24.

The central bank sold 10 billion yuan ($1.6 billion) of one-year bills at a yield of 3.584 percent, according to a statement on its website yesterday. It also sold 50 billion yuan of seven-day repurchase agreements at 2.7 percent and 40 billion yuan of 28-day repos at 2.8 percent.

The finance ministry sold 30 billion yuan of seven-year bonds today at an average yield of 3.65 percent, according to a trader at a finance company that is required to bid at government debt auctions.

The one-year swap rate, the fixed cost to receive the seven-day repurchase rate, decreased 10 basis points, or 0.10 percentage point, to 3.56 percent.

--Editor: Sandy Hendry

To contact Bloomberg News staff for this story: Kyoungwha Kim in Singapore at;

To contact the editor responsible for this story: Sandy Hendry at

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