SHANGHAI: China's money rates rose on Monday as banks and other institutions put money aside for a major bond auction due later, but dealers said funds remain ample.
China Shipbuilding Industry will auction around 8.1 billion yuan ($1.27 billion) in convertible bonds on Monday. Banks must place money in a special account in order to subscribe to IPOs or bond offerings.
Banks will also put money aside for regular payments to meet their reserve requirement ratios (RRR) on Tuesday. Banks must make regular payments on the 5th, 15th and 25th in order to meet the RRR, with the amount of the payment adjusted in line with their current volume of deposits.
But dealers said the impact of RRR payments and the bond auction would be short-lived.
"These are just temporary impacts. We do not feel money is actually tightening," said a dealer at a city commercial bank in Shanghai.
The benchmark weighted-average seven-day bond repurchase rate rose 15.23 bps to 2.5289 percent near midday, from Friday's close of 2.3766 percent, while the shortest overnight rate rose 2.84 bps to 1.9277 percent.
China's interest-rate swaps (IRS) hovered around low levels on Monday, with increasing expectations of a interest rate cut prompted by a slowdown in the domestic economy.
US job growth braked sharply for a third straight month in May, sparking worries that global economic recovery faces new challenges on top of the soverign debt crisis in Europe.
One-year interest-rate swaps were flat at 2.36 percent, while five-year IRS fell 2 bps to 2.37 percent by midday.
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