China Repo Rate Steady on Optimism G-20 to Tackle Europe Crisis - Bloomberg

By Kyoungwha Kim - 2012-06-18T02:02:13Z

China’s benchmark money-market rate was steady on speculation global leaders will outline measures to contain Europe’s debt crisis and revive the global economy.

Leaders from the Group of 20 economies, who are gathering in Mexico for a two-day summit that starts today, are waiting for policy makers from Europe to indicate what they are going to do, World Bank President Robert Zoellick said. China’s economic growth in the second quarter should be the “lowest” this year, Chen Yulu, an academic adviser to the People’s Bank of China, said at a forum in Beijing today.

“Expectations for further global efforts on growth are likely to be positive for sentiment, at least temporarily,” said Wee-Khoon Chong, a strategist at Societe Generale SA in Hong Kong. “The markets should be relieved and be back to risk- on mode.”

The seven-day repurchase rate, a gauge of funding availability in the financial system, was little changed at 2.70 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. It fell three basis points, or 0.03 percentage point, earlier.

The central bank didn’t gauge demand for bill sales this week, suggesting it won’t drain cash from the system, according to a trader at a primary dealer required to bid at the auctions. The monetary authority asked banks to submit orders for 28- and 91-day repurchase contracts this morning, according to the trader, who declined to be identified because the information isn’t public.

The PBOC hasn’t sold three-month and one-year bills since Dec. 22 and Dec. 27, respectively.

The one-year swap rate, the fixed cost needed to receive the seven-day repurchase rate, was little changed at 2.59 percent in Shanghai after increasing 20 basis points last week, according to data compiled by Bloomberg. The yield on the 2.87 percent government bonds due February 2013 rose one basis point, or 0.01 percentage point, to 2.173 percent.

To contact Bloomberg News staff for this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net