SHANGHAI, July 28 — China’s money-market rate declined by the most in three weeks as the central bank added cash to the financial system via open-market operations.

The People’s Bank of China sold 50 billion yuan (RM30.7 billion) of seven-day reverse-repurchase agreements at 2.5 per cent today, according to a statement on the website. That exceeds the 35 billion yuan of similar contracts maturing today. The PBOC will also auction 50 billion yuan of three— month treasury deposits on behalf of the Ministry of Finance on July 30. The injections came after the Shanghai Composite Index of stocks slumped the most since 2007 yesterday.

The benchmark seven-day repurchase rate, a gauge of interbank funding availability, fell nine basis points to 2.42 per cent as of 10:17 am in Shanghai, according to a weighted average from the National Interbank Funding Centre. That’s the biggest drop since July 6.

“The increase in reverse repos shows the PBOC is considering market sentiment, and has the intention to stabilise the money market at such a sensitive time,” said Huang Hai, Beijing-based deputy head of research at SDIC CGOG Futures Co, a unit of State Development & Investment Corp “Actual interbank liquidity is good, and it won’t be a concern in the short term.”

The Shanghai Composite fell 3.3 per cent today, adding to Monday’s 8.5 per cent loss.

The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, dropped three basis points to 2.51 per cent, according to data compiled by Bloomberg.

Prudent policy

The PBOC reiterated it will adopt a prudent monetary policy in the second half, according to a statement on the website ahead of a meeting of branch chiefs scheduled for early August. The central bank will ensure ample liquidity, keep the yuan stable and stabilise market expectations, it said.

The yield on government bonds due May 2016 rose five basis points to 2.3 per cent, after falling 10 basis points yesterday, the most since May 27, according to prices from the National Interbank Funding Centre. The yield on securities maturing in April 2025 climbed one basis point to 3.48 per cent. — Bloomberg