China’s benchmark money-market rate rose toward a one-month high as cash demand increased ahead of a holiday and on speculation the central bank will tighten policy to cool the property market.
The People’s Bank of China will offer 30 billion yuan ($4.8 billion) of 28-day repurchase agreements today, according to a trader at a primary dealer required to bid at the auctions. The PBOC’s branches could “appropriately” raise requirements for down-payments and interest rates on second-home mortgages, Shanghai Securities News reported today, citing a person it didn’t identify.
“Money rates are higher ahead of the short week” and concern about potential measures to cap housing prices, said Wee-Khoon Chong, a Hong Kong-based strategist at Societe Generale SA. China’s financial markets will be shut Thursday and Friday for a public holiday.
The seven-day repurchase rate, which measures funding availability in the interbank market, climbed three basis points, or 0.03 percentage point, to 3.45 percent at 10:02 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. It touched 3.47 percent yesterday, the highest since March 5.
Former central bank adviser Yu Yongding said China may face “relatively large” capital inflows, the China Securities Journal reported today. Funds may flow to countries with higher yields because of a U.S. loose monetary policy, Yu said.
The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repo rate, was steady at 3.28 percent, according to data compiled by Bloomberg.
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