November 8, 2012 / 4:57 AM / 5 years ago

China's money rates rise after central bank drains funds

* Benchmark 7-day repo rate rises 16 bps to 3.2769 pct
    * C.bank unexpectedly drains 101 billion yuan from market
    * Money rates seen staying stable during party Congress

    SHANGHAI, Nov 8 (Reuters) - China's money rates rose after
the central bank's open market operations on Thursday
unexpectedly resulted in a net drain of  101 billion yuan
($16.18 billion) from the banking system this week, but dealers
still expect rates to remain stable during the ongoing Communist
Party Congress. 
    The Chinese authorities are expected to keen on maintaining
stability in financial markets while the party hands power to a
fifth generation of leaders. 
    Last week, the People's Bank of China (PBOC) injected a
record high of 379 billion yuan into the banking system to keep 
liquidity ample.
    On Tuesday, the PBOC injected 277 billion yuan, and traders
had expected a further injection on Thursday to bridge the 533
billion yuan scheduled to drain from the system this week.
    Instead the bank injected only 145 billion yuan, allowing a
net drain of 101 billion for the week and putting upward
pressure on rates.
    The benchmark weighted-average seven-day bond repurchase
rate rose 15.82 basis points to 3.2769 percent
from 3.1187 percent at the close on Wednesday.
    The 14-day repo rate rose to 3.3951 percent
from 3.3126 percent, and the one-day repo rate 
rose to 2.5781 percent from 2.5756 percent.
    Interest rate swaps (IRS) were little changed on Thursday,
with few players expecting changes to monetary policy in the
near term. Market players expect data to be released on Friday
will show inflation slowed in October.
    One-year IRS was at 3.13 percent, unchanged
from Wednesday's close, while the benchmark five-year IRS
 edged up to 3.36 percent from 3.34 percent.
    
                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         3.2769     3.1187    +15.82
7-day SHIBOR           3.2792     3.1229    +15.63 
 Note: Repo rate is weighted average.
     
($1 = 6.2437 Chinese yuan)

 (Reporting by Chen Yixin and Pete Sweeney; Editing by Simon
Cameron-Moore)

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