SHANGHAI, Jan 7 ― China’s benchmark money-market rate fell to a three-week low as cash supply improved in the interbank market following year-end regulatory checks.
The seven-day repurchase rate, a gauge of interbank funding availability, fell 13 basis points to 3.84 per cent as of 4.35pm in Shanghai, according to a weighted average from the National Interbank Funding Center. It has dropped 112 basis points in a four-day declining streak and touched 3.83 per cent earlier today, the lowest since December 17.
Funds are returning to the financial system following the year-end checks and before share sales that are forecast to drain cash later this month. Some 20 initial public offerings next week will lock up 1.7 trillion to 2.2 trillion yuan (RM980 billion to RM1.2 trillion), according to a Haitong Securities Co. report released yesterday.
“In terms of liquidity, this week should be the most ample this month,” said Chen Peng, a fixed-income analyst at Fortune Securities Co. in Shenzhen. “Later on, IPOs and tax payments will tighten the market, and the central bank should provide short-term liquidity support if rates spike too much.”
The 14-day repo rate gained for the first time in four days, rising four basis points to 4.73 per cent.
The People’s Bank of China asked lenders today to submit orders for 14- and 28-day repurchase agreements, 14-day reverse repos, and 91-day bills for tomorrow as usual, according to a trader at a primary dealer required to bid at the auctions.
The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, declined two basis points, or 0.02 per centage point, to 3.39 per cent, according to data compiled by Bloomberg.
The yield on the 4.13 per cent notes due September 2024 was unchanged at 3.64 per cent, prices from the National Interbank Funding Center show. ― Bloomberg
