THE overnight borrowing cost in China’s money market yesterday rose to a four-year high as cash supply tightened just as tax payments increased demand for liquidity.

The overnight repurchase rate rose 11 basis points to 3.0001 percent yesterday noon in Shanghai, the first time it’s reached that level since April 2015. The measure has jumped 35 basis points in three sessions, and is higher than the seven-day rate, which fell to 2.7351 percent.

The People’s Bank of China rolled over about half of the funds coming due through one of longer-term policy tools yesterday, while offering 160 billion yuan (US$23.91 billion) in seven-day money via open market operations. April and May are a peak time for tax payments, which may total 500 billion yuan, according to Hua Tai Securities Co.

The rise in the overnight rate shows “tighter liquidity conditions amid the bullish China stock market,” said Ken Cheung, a senior Asian forex strategist at Mizuho Bank Ltd. It may be rising faster than the seven-day rate because of tax payments that might be due in the coming days, he said.

“Looking from a broad perspective, the central bank intends to tighten marginally and the probability of a reserve requirement ratio cut is now lower,” said Qi Sheng, chief fixed-income analyst at Zhongtai Securities Co. (SD-Agencies)