PBOC eyes many tools for funds
Print Edition
CHINA’S central bank said it will use multiple tools to support liquidity after a media report said it has injected 50 billion yuan (US$8.17 billion) in several banks to ease a money crunch.
“Liquidity in the banking system is generally ample, but short-term money supply and money market interest rate are affected by factors including frequent initial public offerings,” the People’s Bank of China said on its official microblog.
The PBOC said it will offer timely liquidity support through various monetary policy tools to address the volatility.
The announcement was made as the seven-day repurchase rate, a measure of borrowing costs among banks, hit 6.5 percent, the highest since January.
The average seven-day rate touched a two-month high of 3.699 percent yesterday.
Market News International earlier reported that the PBOC has supplied 50 billion yuan through a channel called Short-term Liquidity Operations to some banks on Thursday.
Usually an official announcement for SLOs is made a month after the actual operation.
The SLO was introduced in 2013 as a way to manage cash and the latest operation was carried out on February 27 and reported on March 31.
Thursday’s injection was made during a rare extension of money market trading to allow banks to settle their positions, the report said.
The National International Funding Center has prolonged trading by half an hour several times in the past two years to allow banks to find more cash when the market was hit by a liquidity crunch.
Next week, 11 companies are due to debut their stocks on the market, with seven of them on Monday.
Analysts have estimated that the succession of IPOs has frozen about 1 trillion yuan from the market as investors have to place aside money in their accounts when they submit applications to purchase the new shares.
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