China’s money-market rates jumped to four-month highs as corporate tax payments tied up funds amid uncertainty over the central bank’s policy stance. The one-year government bond yield climbed to a record as demand weakened at a sale of the securities.
China’s stocks listed in the U.S. retreated from a one-month high after the nation raised interest rates for the third time this year to tame inflation that has quickened to the fastest pace since 2008.
China’s money-market cash squeeze is likely to reduce credit growth this year by 750 billion yuan ($122 billion), an amount equivalent to the size of Vietnam’s economy, according to a Bloomberg News survey.
The European Central Bank would do “a lot, lot more” in terms of easing monetary policy if it mimicked the aggressiveness of foreign counterparts, says David Mackie, chief European economist at JPMorgan Chase & Co.
South Korea’s won and India’s rupee declined the most among Asian currencies this week on concern China’s economic slowdown and Europe’s debt crisis will deter investors from buying emerging-market assets.
China’s benchmark money-market rate declined on speculation the central bank will inject more funds into the financial system as part of efforts to prop up growth in the world’s second-largest economy.