China Money Rate Drops to Three-Month Low

China’s benchmark money-market rate declined to the lowest level in three months, spurring speculation the central bank will revert to draining funds from the financial system.

The People’s Bank of China asked local lenders to submit orders for 28-day repurchase contracts, 91-day bills, and 14-day reverse repos planned for tomorrow, according to a trader at a primary dealer required to bid at the auctions. The PBOC hasn’t issued repos, or contracts used to siphon off funds, since June. The central bank added 10 billion yuan ($1.6 billion) to the market via seven-day reverse-repos yielding 3.9 percent yesterday, after injecting a net 33 billion yuan last week.

The seven-day repurchase rate, a gauge of funding availability in the banking system, declined 54 basis points, or 0.54 percentage point, to 3.31 percent as of 10:35 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. It touched 3.3 percent, the lowest level since July 18.


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