Swap rate rises as reserve ratio cuts unlikely

China's interest-rate swaps climbed by their largest amount in a week on speculation the central bank will avoid easing lenders' reserve requirements as it uses open-market operations to add capital to the financial system.

On Monday, the People's Bank of China gauged how much demand exists for seven-day reverse-repurchase contract auctions this week, according to a trader required to bid at the sales. The monetary authority has decided to postpone lowering reserve ratios, seeing that reverse repurchases are helping to ensure there is an adequate supply of cash, according to a commentary published on Monday by the Financial News, which is controlled by the central bank.