China’s overnight money-market rate climbed the most in almost a month on concern cash supplies will be reduced by reverse-repurchase contract redemptions.
A total of 50 billion yuan ($7.8 billion) in the agreements will mature tomorrow after 155 billion yuan came due yesterday, said Kumar Rachapudi, an interest-rate strategist at Barclays Plc in Singapore. The People’s Bank of China is set to auction 50 billion yuan of three-month treasury deposits on behalf of the Ministry of Finance on July 24, according to a statement on the ministry’s website.
“Maturing reverse repos this week are taking cash out of the banking system,” Rachapudi said. “There are also corporate dividend payments happening and, given the trend in foreign- exchange flows, we should see money-market rates staying elevated at these levels unless the PBOC injects further liquidity.”
The overnight repurchase rate, which measures interbank funding availability, surged 32 basis points, or 0.32 percentage point, to 2.96 percent as of 4:46 p.m. in Shanghai, the biggest gain since June 20, according to a weighted average compiled by the National Interbank Funding Center. The seven-day repurchase rate, which measures interbank funding availability, rose 19 basis points to 3.47 percent.
The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, increased five basis points, or 0.05 percentage point, to 2.55 percent, a fourth day of advance, according to data compiled by Bloomberg.
The yield on the 3.51 percent government bonds due February 2022 slipped one basis point to 3.27 percent, according to the Interbank Funding Center.
Foreign direct investment in the world’s second-largest economy dropped 6.9 percent in June from a year earlier, the government said yesterday, as China’s economic expansion cooled to the slowest pace in three years in the second quarter. The economy grew 7.6 percent from a year earlier, official data showed on July 13.
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