China money rates rise on month-end, holiday cash demand

* Banks need funds to meet regulatory requirements
* Money conditions could improve after holiday

By Chen Yixin and Pete Sweeney
SHANGHAI, April 25 (Reuters) - China's key seven-day money
rates rose sharply on Wednesday as banks conserved funds to meet
demand from retail customers withdrawing cash ahead of a public
holiday next week, dealers said.
Banks still need money to demonstrate compliance with
mandated loan-to-deposit ratios assessed at the end of each
month, traders said.
"Money demand is strong around month-end and prior to
holidays, so shorter-term money rates face pressure," said a
dealer at a Chinese bank in Shanghai.
"But longer-term, such as 14-day, rates have been steady,
indicating money conditions will improve after the holiday."
China's markets will be closed April 30 and May 1 for the
Labor Day Holiday.
The benchmark seven-day repo rate rose to
3.9258 percent from 3.7356 percent on Tuesday, while the
overnight repo rate, the shortest tenor repo, was
up to 3.4754 percent at midday from 3.2245 percent at Tuesday's
close.
But the 14-day money rate only inched up 3.28
basis points to 3.9863 percent from 3.9535 percent.
Dealers said they expected money rates would continue to
hover around current levels next week due the month-end and
holiday factors.
Most interest rate swaps fell slightly. The benchmark
10-year IRS dropped 10 basis points to 3.35
percent at midday and the one-year IRS edged 3 bps
lower to 3.21 percent.

Current Prev close Change
(pct) (bps)
7-day repo 3.9258 3.7356 + 19.02
7-day SHIBOR 3.9133 3.7363 + 11.66
Note: Repo rate is weighted average.

($1 = 6.3 yuan)

(Reporting by Yixin Chen and Pete Sweeney; Editing by Jonathan
Hopfner)