China’s overnight money-market rate rose for a second day on speculation the central bank’s resumption of bill sales will curb the supply of cash in the financial system.
The People’s Bank of China sold 10 billion yuan ($1.6 billion) of three-month bills at a yield of 2.91 percent yesterday, the first issue of such securities since December 2011, according to a statement on its website. Prior to that, the monetary authority has only used 28- or 91-day repurchase contracts to drain capital since February.
The one-day repurchase rate, which measures interbank funding availability, rose three basis points to 2.14 percent, according to a weighted average rate compiled by the National Interbank Funding Center. It fell 85 basis points this week. The seven-day repurchase rate touched a two-week high of 4 percent today before dropping 13 basis points to 2.98 percent.
“Liquidity won’t be overly loose any more,” said Song Qiuhong, a bond analyst at Foshan Shunde Rural Commercial Bank Co. in Foshan, a city in the southern province of Guangdong. “The seven-day repo may stay above 3.3 percent most of the time this quarter.”
New home prices jumped 5.3 percent from a year earlier in April, defying government efforts to cool the property market, according to SouFun Holdings Ltd., which owns the country’s biggest real-estate website. The consumer price index rose 2.4 percent last month, the most this year, official data show, while the yuan touched a 19-year high yesterday. China is tightening monetary policy even as benchmark interest rates were cut this month in South Korea, Australia, Europe and India.
The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, was unchanged at 3.27 percent, according to data compiled by Bloomberg. The rate climbed six basis points, or 0.06 percentage point, this week.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.