CORRECTED-China's IRS falls on 33-month low inflation data

Fri Nov 9, 2012 1:15am EST

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(Corrects to 33-month low in headline)
    * China's CPI eases to 33-month low of 1.7 percent
    * Benchmark 5-year IRS falls to 3.35 percent
    * Little room for further falls as f'cast of rebound in CPI

    SHANGHAI, Nov 9 (Reuters) - China's interest rate swaps fell
slightly on Friday after  inflation data came in lower than
expected, which some analysts said raised the likelihood of
future monetary easing.
    China's consumer price inflation (CPI) eased to a 33-month
low of 1.7 percent in October, down from September's 1.9
percent, official data showed on Friday, lower than analysts had
expected. 
    However, many dealers were cautious about reading too much
into the data.
    "Rates fell slightly, but they have little room to fall
further as we widely expect the inflation could rebound in the
medium-term," said a dealer at a Chinese bank in Shanghai.
    Yao Wei, China economist at Societe Generale, said that
Chinese CPI is likely to rise significantly in the next two
months because the economy is improving.
    One-year IRS traded at 3.14 percent, down from
Thursday's close of 3.15 percent, while the benchmark five-year
IRS dipped to 3.35 percent from 3.36 percent.
    On the money market, the benchmark seven-day repo rate fell
sharply on expectations that the central bank will keep money
rates stable during the ongoing Communist Party Congress, which
ends on Nov 14.
    The benchmark weighted-average seven-day bond repurchase
rate fell 17.23 basis points to 3.1104 percent
from 3.2827 percent at the close on Thursday.
    The 14-day repo rate edged down to 3.3596
percent from 3.3758 percent, and the one-day repo rate
 edged up to 2.6273 percent from 2.5793 percent.

                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         3.1104     3.2827    - 17.32
7-day SHIBOR           3.1133     3.2792    - 16.59
 Note: Repo rate is weighted average.
     
($1 = 6.24 Chinese yuan)

 (Reporting by Chen Yixin and Pete Sweeney; Editing by Kim
Coghill)
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