(Yicai) Dec. 19 -- China’s central bank revived 14-day reverse repurchase operations for the first time in three months, deploying the longer-dated tool in a typical year-end move to maintain ample liquidity in money markets.

The People's Bank of China injected a net CNY100 billion (USD14.2 billion) into the market through a 14-day reverse repo yesterday, the first since Sept. 26. It also carried out a CNY88.3 billion (USD12.5 billion) seven-day reverse repo operation at an unchanged rate of 1.4 percent.

Reverse repos worth CNY118.6 billion expired on the same day, according to financial data provider Wind Information. The PBOC previously said that 14-day reverse repo operations would be conducted through fixed-quantity tenders with multiple interest rate bids.

The PBOC typically rolls out 14-day reverse repos at this point in the year to offset rising liquidity pressures from bank assessments, swings in fiscal receipts and payments, and increased household cash withdrawals, said Wang Qing, chief macroeconomic analyst at Golden Credit Rating.

It helps to smooth market volatility, keeps liquidity steady and sufficient, and supports market confidence and the transmission of monetary policy, he added. The reverse repo’s size, deemed moderate, was determined based on financial institutions' funding needs and market liquidity management targets, Wand noted.

Running seven-day and 14-day reverse repos at the same time allows the PBOC to adjust liquidity maturities flexibly, meeting cross-year funding demand without letting liquidity build up too much, said Pang Ming, a senior researcher at the National Institution for Finance & Development.

The 14-day operations cover funding needs through the New Year holiday, underscoring the central bank’s aim to stabilize year-end market conditions by calibrating liquidity supply and demand, Pang added.

The PBOC is likely to continue using open market operations as its main tool for managing liquidity, with adjustments becoming more targeted and effective, Pang noted, adding that monetary policy will remain focused on providing a stable and appropriate financial environment for the real economy.

A range of liquidity tools will remain key to smoothing short-term market swings and guiding reasonable interest rate levels to ensure financial system stability, according to Pang. At the same time, the central bank will work to improve monetary policy transmission and steer funds more efficiently toward priority sectors and weaker parts of the economy, supporting high-quality growth, he said.

Editor: Martin Kadiev