June 5, 2012 / 4:52 AM / 5 years ago

China's money rates rise; c.bank drains funds

 * C.bank drains 30 billion yuan via open market ops
 * Banks meet regular RRR payments due on Tuesday
 * Market players cite increasing money demand
 * China Dev. Bank bond auction seen fueling demand
 By Chen Yixin and Gabriel Wildau	
 SHANGHAI, June 5 (Reuters) - China's key money rate rose
slightly on Tuesday after the People's Bank of China drained
funds via open market operations, with dealers citing increased
money demand.	
 China's central bank will drain 30 billion yuan ($4.71
billion) from the money markets through 28-day bond repurchase
agreements on Tuesday, traders said. 	
 The benchmark weighted-average seven-day bond repurchase
rate rose 6.55 bps to 2.5998 percent near midday,
from Monday's close of 2.5343 percent, while the shortest
overnight rate rose 8.12 bps to 2.0052 percent.	
 "Money is still ample today, but we can feel the money
demand is stronger than previous days," said a dealer at a
state-owned bank in Shanghai.	
 Banks still need funds to make regular payments to meet
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.	
 Demand for funds was also fuelled by a bond auction by China
Development Bank, which sold a total of 30 billion
yuan in one-, three-, five-, seven- and ten-year bonds.	
 China's interest-rate swaps (IRS) rose slightly on Tuesday,
with one-year interest-rate swaps rising to 2.43
percent - up seven bps from Monday's close - and five-year IRS
 up 2.75 percent by midday from Monday's 2.67
                               Current  Prev close  Change
                                    (pct)           (bps) 
 7-day repo                       2.5998   2.2343     +6.55
 7-day SHIBOR                     2.5967   2.5183     +7.84
  Note: Repo rate is weighted average.
($1 = 6.3690 Chinese yuan)	
 (Editing by Richard Pullin)	

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