SHANGHAI: China's money rates moved a touch higher as the central bank allowed a slight daily net drain of funds from the market on Tuesday, with banks and companies preparing for a spike in demand for cash at the end of the month, traders said.
The benchmark weighted-average seven-day bond repurchase rate rose 15.47 basis points to 3.3507 percent from 3.1960 percent at the close on Monday.
The 14-day repo rate rose to 3.4497 percent from 3.4294 percent, and the one-day repo rate rose to 2.2522 percent from 2.1619 percent.
"Overnight liquidity is quite good but for longer-term tenors there are some considerations about money demand at the month-end," said a trader at a large state-owned bank in Shanghai.
Traders said that rates had bounced up from month-lows at the end of last week on concerns the central bank would reduce the level of funds injected through open market operations, allowing a net drain this week.
Tuesday's single-day net injection of 114 billion yuan ($18.29 billion) was lower than last week's Tuesday injection of 186 billion yuan and 277 billion yuan the week before.
But traders said rates were still within comfortable levels and expected the central bank to roughly balance fund injections and drains for the week.
Maturing reverse repos and bills are set to drain a net 227 billion yuan from the banking system this week.
The 28-day repo rate fell 29.98 bps to 3.6006, although one trader said that the rate can be easily skewed by one unusual trade due to the small number of players trading the tenor.
Traders have said recently they expect increased pressure on longer tenors ahead of a seasonal surge of demand for cash in the final few weeks of the year.
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