China's money-market rate jumped to its highest level in three weeks after the central bank auctioned treasury deposits at higher yields, reflecting banks' expectations that cash demand will rise as the end of the quarter nears.

The overnight repurchase rate rose for a second day after the People's Bank of China offered 40 billion yuan ($6.3 billion) of three-month treasury deposits to commercial banks on behalf of the Ministry of Finance at a yield of 3.7 percent, compared with 3.52 percent at the last sale in August. That was the highest rate since September 2011 in similar-maturity auctions.

"The higher yield shows commercial banks are preparing for a cash crunch around the end of this quarter," said Wang Huane, a senior bond trader at Qilu Bank Co in Jinan, Shandong province. "The central bank is trying to prevent a cash shortage by using reverse-repurchase agreements, but they are limited in solving the problem."