(Yicai Global) Sept. 7 -- China's central bank, the People's Bank of China (PBOC), lent CNY289 billion (USD44.3 billion) to several Chinese banks via 'Medium-term Lending Facility' (MLF) with one-year maturity today. PBOC also halted reverse repos on Thursday.
A total of CNY283 billion of MLF loans will mature in September, including CNY169.5 billion of MLF that matures today. CNY113.5 billion of MLF is due to mature on Sept. 16. In other words, PBOC has so far injected CNY6 billion into the interbank market by increasing the amount of MLF this month.
The MLF loans is one of the several tools the PBOC employs to manage monetary policy and lending. It has been introduced to provide selected banks with funds as authorities have stepped up efforts to support lending to selective sectors of the economy rather than adding liquidity to the overall financial system.
By increasing the total amount of MLF this month, the central bank aims to enhance market liquidity to meet the cash demand during the week-long National Day holiday, a major boost to shopping and tourism. This means the banks need more money to cover the cash requirements of their depositors.
In the interbank market today, short-term interest rate remained steady, while the medium-term rate climbed. The overnight "Shanghai Interbank Offered Rate" (SHIBOR) is slightly down 0.04 basis points to 2.6406 percent. The one-week term rate decreased 0.36 basis points to 2.8056 percent. The Shibor for one-month loans and three-month loans climbed 1.45 basis points and 0.77 basis points to 3.9335 percent and 4.4348 percent, respectively.