China money rate tumbles most in 3 yrs

China’s benchmark money-market rate tumbled the most in three years after the People’s Bank of China kept its weekly sale of one-year bills to 1 billion yuan ($150 million), the smallest amount since October 2007.

More than 200 billion yuan of cash is expected to return to the financial system this month from maturing bills and repurchase contracts, according to Citic Securities Co estimates. The central bank injected a combined 166 billion yuan in the last three weeks through so-called open-market operations, according to data compiled by Bloomberg.

“The PBOC has injected liquidity into the market for a couple of weeks in a row now,” said Wei Yao, a Hong Kong-based economist at Societe Generale SA. “From past patterns, the central bank usually adds cash to the market for a bit and then hikes interest rates.”

 

The seven-day repurchase rate, which measures lending costs between banks, fell 1.01 percentage points to 2.08 per cent, according to a daily fixing published at 11 am by the National Interbank Funding Center in Shanghai. That’s the steepest slide since December 2007.

Longer-dated rates recorded more modest declines. The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repo rate, dropped five basis points to 2.91 per cent, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.