PBOC Extends Banking Liquidity Again
Tang Shihua
DATE:  Feb 27 2019
/ SOURCE:  yicai

(Yicai Global) Feb. 27 -- The People's Bank of China injected more cash into the financial system today to ensure market liquidity remains ample as banks shy away from lending toward the end of the month.

The central bank conducted a CNY60 billion (USD9 billion) seven-day reverse repo at an interest rate of 2.55 percent this morning, offset by CNY20 billion of reverse repos maturing today. This was the fourth straight day of net injections, adding on to CNY200 billion pumped into the banking system over the past two days and CNY60 billion last week.

The PBOC had withdrawn CNY1 trillion (USD149 billion) from the market the week prior -- the first working week after the week-long Chinese New Year holiday.

While the central bank is increasing liquidity, lenders are typically tighter with their money towards the end of the month as they look to pass regulator evaluations, Ming Ming, chief analyst of fixed income assets at CITIC Securities, told Yicai Global earlier this week, adding that this is pushing up market interest rates.

Despite the cash injection, most Shanghai Interbank Offered Rates still moved higher. Only the overnight SHIBOR was down, falling 5.1 bips to 2.6540 percent. The one-week rate rose 0.5 basis points to 2.7500 percent and the three-month rate was flat at 2.7560 percent.

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Keywords:   Open Market Operation,PBOC,Reverse Repo