Bloomberg News

China Repo Rate Snaps Four-Day Rise After Bank Deposits Climb

April 17, 2012

China’s benchmark money-market rates fell, snapping a four-day gain, after savings at banks rose.

Fresh yuan deposits at lenders increased 10 percent in March from a year earlier to 2.95 trillion yuan ($468 billion), according to central bank data on April 12. The decline in the rate may be limited as companies’ tax payments due this month and next boost demand for funds, said Ju Wang, a Barclays Capital strategist.

“Liquidity improved after bank deposits increased in March,” Singapore-based Ju said. Still, corporate tax payments “will reduce broad liquidity,” she said.

The seven-day repo rate, a gauge of funding availability in the financial system, dropped four basis points to 3.76 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center.

The one-year swap rate, the fixed cost needed to receive the seven-day repurchase rate, increased one basis point, or 0.01 percentage point, to 3.23 percent.

The central bank sold 33 billion yuan of 28-day repurchase agreements at a yield of 2.8 percent today, according to a statement on its website. The People’s Bank of China is likely to continue making small withdrawals via open-market operations, Ju said.

The yield on the 3.51 percent government bonds due February 2022 was little changed at 3.53 percent today, according to the National Interbank Funding Center.

To contact Bloomberg News staff for this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

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


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