(Yicai) June 16 -- China’s central bank has injected funds into the banking system using outright reverse repurchase agreements for the second time this month, aiming to ensure a net increase in liquidity over June.

The People’s Bank of China added CNY400 billion (USD55.7 billion) of six-month funds through outright reverse repos today, according to an announcement on June 13. The operation involved both interest rate bidding and multiple price bidding methods.

The PBOC injected CNY1 trillion (USD139.3 billion) of three-month funds using outright reverse repos on June 13, disclosing the amount before the end of the month for the first time so as to enhance transparency during the peak credit season.

The bank used the new liquidity management tool for the first time at the end of last October, while advance notice of its use has helped to boost market confidence, according to observers, thereby easing concerns over liquidity needs at the end of the second quarter.

With CNY1.2 trillion (USD167 billion) of reverse repos maturing this month, the PBOC has injected a net CNY200 billion (USD27.8 billion) into the banking system through this month’s two operations.

Having last month released CNY1 trillion of long‑term liquidity by cutting the reverse requirement ratio, the share of deposits that banks must hold back as cash, the PBOC is continuing to front‑load liquidity operations to offset pressures from heavy government bond sales and maturing interbank certificates of deposit, keeping interbank funding ample, according to Wang Qing, chief macroeconomic analyst at Golden Credit Rating.

China is implementing a more proactive fiscal policy this year, especially by issuing more government bonds to support the economy. Local government debt sales had surged 55 percent to more than CNY4.5 trillion (USD626.8 billion) as of yesterday from a year ago, according to financial data platform Wind Information.

At the same time, the banking sector is facing a peak maturity period for interbank certificates of deposit, with the amount falling due this month reaching CNY4.2 trillion (USD585 billion), more than May’s CNY1.7 trillion and the most for any month in recent years, further tightening interbank liquidity.

Editor: Tom Litting