Central bank injects USD 57.9 bln into market in one week to maintain liquidity
Dec 20, 2018 (China Knowledge) - The China’s central bank has conducted a total of USD 8.71 billion (RMB 60 billion) of reverse repos yesterday to maintain market liquidity. This is the third consecutive day the People’s Bank of China (PBOC) has pumped funds into the market this week. The total injection into the market this week is worth USD 57.9 billion (RMB 400 billion).
In the operation held yesterday, the PBOC has injected RMB 40 billion of 7-day reverse repos at an interest rate of 2.55% and RMB 20 billion of 14-day reverse repos at an interest rate of 2.7%.
The injection was necessary, and is aimed at keeping liquidity at a reasonable and sufficient level in the banking system, according to the statement released by the bank. The central bank has finally resumed its open market operations earlier on Monday after a suspension that lasted for 36 straight trading days.
The reverse repos will have the central bank purchasing securities from commercial banks through a bidding process, with an agreement to sell it back to the commercial banks in the future.
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