PBOC acts to improve liquidity among banks
Print Edition
Liquidity improved among banks yesterday as the People’s Bank of China conducted the first open market money injection in a month to meet demand for cash ahead of the weeklong Spring Festival holiday.
The central bank yesterday added 255 billion yuan (US$42 billion) through reverse repurchase agreements, the first such operation since December 23.
The PBOC also said it has allowed small and medium-sized banks in 10 regions to tap its Standing Lending Facility for funds ahead of the weeklong holiday starting on January 31.
“These are significant steps by the PBOC,” said Zhang Zhiwei, Nomura China chief economist. “These measures should help reduce the liquidity risk in the interbank market and the default risk in the corporate sector over the next several weeks.”
The seven-day repo rate, measuring bank borrowing costs, fell 0.88 percentage points to 5.44 percent in Shanghai yesterday, according to the National Interbank Funding Center.
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