Bloomberg News

China Overnight Rate Drops to Three-Week Low as PBOC Adds Funds

October 07, 2013

China’s overnight money-market rate fell to the lowest level in almost three weeks after the central bank injected funds into the financial system.

The People’s Bank of China sold 65 billion yuan ($10.6 billion) of seven-day reverse-repurchase agreements at 3.9 percent today, according to a statement on the website. The authority added a net 150.1 billion yuan in the week ended Sept. 27 to stabilize rates and help banks meet quarter-end funding demand before the Oct. 1-7 National Day holiday.

“There will be 80 billion yuan of reverse repos maturing this week, and given the new issuance of government bonds in the next few days, it’s not strange the central bank decided to improve the liquidity,” said Gao Hui, an analyst at Founder Securities Co. in Beijing.

The overnight repurchase rate, a gauge of funding availability in the banking system, declined 14 basis points, or 0.14 percentage point, to 3 percent as of 10:06 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. That’s the lowest level since Sept. 18.

The cost of the one-year interest-rate swap, the fixed payment to receive the floating seven-day repo rate, was little changed at 3.97 percent, data compiled by Bloomberg show.

The yield on the government’s 4.08 percent bonds due August 2023 was unchanged at 4.03 percent, according to data provided by the Interbank Funding Center.

A service industries Purchasing Managers’ Index for September stood at 52.4, versus 52.8 in August, according to a report by HSBC Holdings Plc and Markit Economics today. China shouldn’t overly expand fiscal deficit and credit to spur short-term growth, Securities Daily published commentary today by Yi Xianrong, a researcher at the Chinese Academy of Social Sciences.

To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net

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


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