Bloomberg News

China’s Money Rate Extends Decline on Speculation Inflows Rising

April 09, 2013

China’s money-market rate declined for a third day on speculation rising capital inflows will help boost cash supply in the financial system.

The yuan, which has strengthened 0.6 percent this year, rose 0.13 percent to 6.1943 per dollar, the strongest level since the government unified official and market exchange rates at the end of 1993. Fitch Ratings yesterday cut China’s long- term local-currency debt ranking to A+ from AA-, citing increasing risks to the country’s financial stability given the lack of transparency in the increased borrowings by local governments.

The seven-day repurchase rate, which measures interbank funding availability, dropped five basis points to 3.22 percent as of 9:31 a.m. in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center.

“Foreign capital inflows are probably rising, which is helping bring down money market rates,” said Wang Huane, a senior bond trader at Qilu Bank Co. in Jinan, capital of the eastern Shandong province.

The People’s Bank of China today gauged demand for 14-day reverse repurchase contract and 28-day repo operation tomorrow, according to a trader required to bid at the auctions.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, declined one basis point to 3.26 percent, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

The yield on the 3.52 percent government bond due February 2023 fell five basis points to 3.43 percent, according to the Interbank Funding Center.

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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