Bloomberg News

China Money Rate Rises Most in Two Weeks as Central Bank Boost Repo Sales

March 13, 2012

China’s money-market rate advanced the most in more than two weeks as the central bank boosted sales of repurchase contracts to soak up funds as debt redemptions increase.

The People’s Bank of China issued 66 billion yuan ($10.4 billion) of 28-day (PBOC28V) repos today, up from 30 billion yuan a week ago, according to a statement on its website. Some 254 billion yuan of central bank bills and repurchase agreements will mature this month, compared with 12 billion yuan in February, said Liu Junyu, a bond analyst at China Merchants Bank Co., the nation’s sixth-biggest lender.

“The increase in the repo amount shows the central bank is stepping up efforts to drain liquidity,” said Shenzhen-based Liu. “Since demand for repo contracts is enough to help mop up redemptions this week, the central bank is unlikely to resume three-month bill sales on Thursday.”

The seven-day repurchase rate, which measures interbank funding availability, gained 20 basis points to 3 percent as of 4:48 p.m. in Shanghai, the biggest jump since Feb. 23, according to a weighted average rate compiled by the National Interbank Funding Center.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, rose five basis points, or 0.05 percentage point, to 3.15 percent, according to data compiled by Bloomberg. The yield on the 3.99 percent government bond due June 2021 was steady at 3.48 percent, according to the Interbank Funding Center.

--Judy Chen. Editors: Andrew Janes, James Regan

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at xchen45@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.


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