China’s money-market rate declined the most in more than six weeks on speculation maturing central- bank bills will help meet demand for cash in the financial system.
A total of 699 billion yuan ($107 billion) of bills and repurchase agreements will mature this month, including redemptions of 212 billion yuan this week, according to Guo Caomin, a bond analyst at Industrial Bank Co. in Shanghai. The central bank added a net 28 billion yuan into the debt market last week, the first injection in five weeks, according to data compiled by Bloomberg.
“The bill redemptions will help ease demand for cash in the financial system,” said Liu Junyu, a bond analyst in Shenzhen at China Merchants Bank Co., the nation’s sixth-largest lender. “The market speculates the central bank may not announce new tightening measures after the rate hike last week.”
The seven-day repurchase rate, which measures interbank funding availability, slid 53 basis points to 1.95 percent as of 9:54 a.m. in Shanghai. That was the biggest drop since Feb. 24, according to a weighted average rate compiled by the National Interbank Funding Center. A basis point is 0.01 percentage point.
The People’s Bank of China announced an increase in the benchmark one-year lending rate by a quarter point to 6.31 percent on April 5, raising borrowing costs for a fourth time since October to contain inflation.
A government report on April 15 will show consumer prices climbed 5.2 percent from a year earlier in March, compared with 4.9 percent in the previous month, according to a Bloomberg survey of economists. Premier Wen Jiabao reiterated on April 9 the government should prevent an excessively rapid increase in prices, according to a statement on the State Council’s website.
One-year interest-rate swaps, the fixed cost needed to receive the floating seven-day repurchase rate, declined one basis point to 3.36 percent, according to data compiled by Bloomberg.
