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PBOC transacts 28-day repos for 1st time in decade
Source: Bloomberg News |
September 14, 2012, Friday
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Print Edition
Print Edition
CHINA'S central bank yesterday issued 28-day reverse-repurchase contracts for the first time in a decade, extending the duration of its fund injections into the banking system and damping speculation reserve requirements will be cut.
The People's Bank of China offered 20 billion yuan (US$3.2 billion) of 28-day reverse repos, according to a statement on its website. That was the first time the contract was used since December 2002. The central bank also conducted 35 billion yuan worth of seven-day reverse repo transactions.
"The extension of the tenor of reverse repos suggests that policy makers are continuing to favor temporary measures over cutting the required reserve ratio, which would be a permanent solution," Dariusz Kowalczyk, a senior strategist at Credit Agricole CIB in Hong Kong, wrote in a report yesterday. "It is possible that the reserve requirement ratio will not be cut any time soon. This means that interbank liquidity will likely remain relatively tight."
The People's Bank of China offered 20 billion yuan (US$3.2 billion) of 28-day reverse repos, according to a statement on its website. That was the first time the contract was used since December 2002. The central bank also conducted 35 billion yuan worth of seven-day reverse repo transactions.
"The extension of the tenor of reverse repos suggests that policy makers are continuing to favor temporary measures over cutting the required reserve ratio, which would be a permanent solution," Dariusz Kowalczyk, a senior strategist at Credit Agricole CIB in Hong Kong, wrote in a report yesterday. "It is possible that the reserve requirement ratio will not be cut any time soon. This means that interbank liquidity will likely remain relatively tight."
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