PBOC in­jects funds via re­verse re­pos at flat rates

Shanghai Daily - - BUSINESS -

China’s cen­tral bank con­tin­ued to in­ject liq­uid­ity into the fi­nan­cial sys­tem via open mar­ket oper­a­tions, with rates flat de­spite an in­ter­est rate hike in the US.

The Peo­ple’s Bank of China pumped 150 bil­lion yuan (US$23.5 bil­lion) into the mar­ket through re­verse re­pos, with 80 bil­lion yuan of con­tracts ma­tur­ing, a net in­jec­tion of 70 bil­lion yuan.

The PBOC con­ducted 70 bil­lion yuan of seven-day re­verse re­pos at an in­ter­est rate of 2.55 per­cent, 50 bil­lion yuan of 14-day re­verse re­pos at 2.7 per­cent, and 30 bil­lion yuan of 28-day oper­a­tions at 2.85 per­cent. All rates were flat from pre­vi­ous oper­a­tions.

The Fed­eral Re­serve on Wed­nes­day raised short-term in­ter­est rates by a quar­ter of a per­cent­age point, its sec­ond rate hike this year and the sev­enth since late 2015.

Yes­ter­day’s oper­a­tions fol­lowed net in­jec­tions of 30 bil­lion yuan on Tues­day and 70 bil­lion yuan on Wed­nes­day.

A re­verse repo is a process by which the cen­tral bank bids and buys se­cu­ri­ties from com­mer­cial banks, with an agree­ment to sell them back in the fu­ture.

An­a­lysts be­lieve the moves were made to sta­bi­lize mar­ket hopes as liq­uid­ity de­mand could rise.


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