China's IRS rates edge up after inflation rebounds

Mon Dec 10, 2012 12:27am EST

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* Benchmark 5-year IRS rises 7.5 bps to 3.5950 pct
    * China's November inflation at 2.0 pct, rebounds from
33-month low
    * Money rates almost flat, key 7-day rate falls 0.3 bps

    By Chen Yixin and Pete Sweeney
    SHANGHAI, Dec 10 (Reuters) - China's interest rate swap
rates rose slightly on Monday after domestic inflation showed
signs of rebounding, diminishing expectations for further
monetary easing.
    China released consumer price inflation data for November on
Sunday, which showed that inflation rebounded to 2 percent in
November, up from 1.7 percent in October, a 33-month low. 
    Since additional easing steps would only exacerbate
inflationary pressure, dealers said the November data had dimmed
the likelihood that Beijing would conduct more monetary policy
easing. 
    "Rates rose slightly, but the movement was not significant
given expectations," said a dealer at a Chinese commercial bank
in Shanghai.
    Jiang Chao, an analyst at Guotai Junan Securities in
Shanghai, said he expects consumer inflation will not see a big
rebound until the first quarter of next year. Until then, he
said, the central bank will likely maintain its current stance.
    One-year IRS stood at 3.3650 percent at midday,
up from Friday's close of 3.3000 percent, while the benchmark
five-year IRS gained to 3.5950 percent from 3.5200
percent.
    In the money market, rates were little changed on Monday as
players awaited the results of the central bank's open market
operations on Tuesday, which could inject funds into market.
    "Last week's injection sparked expectations of further
injections by the central bank to help us get through the end of
the year," said a dealer at a Chinese commercial bank in
Shanghai. 
    The benchmark weighted-average seven-day bond repurchase
rate was almost flat at 3.0372 percent from 3.0402
percent at the close on Friday.
    The 14-day repo rate rose to 2.9690 percent
from 2.7830 percent, and the one-day repo rate 
inched down to 2.2573 percent from 2.2622 percent.
    
                                 Current  Prev close  Change
                                       (pct)           (bps)  
7-day repo         3.0372     3.0402    -0.30
7-day SHIBOR           3.0240     3.0540    -0.30  
 Note: Repo rate is weighted average.
     
($1 = 6.23 Chinese yuan)

 (Editing by Jacqueline Wong)
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