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19:52, 30-Oct-2017
Central bank continues net cash injection via reverse repos
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China's central bank injected fresh funds into the financial system for the eighth consecutive day via open market operations on Monday, conducting a 63-day reverse repo for the first time.
The People's Bank of China conducted 150 billion yuan (about 22.7 billion US dollars) of reverse repos, a process by which the central bank purchases securities from commercial banks through bidding with an agreement to sell them back in the future.
The injection saw a net 40 billion yuan pumped into the market Monday, offset by 110 billion yuan in maturing reverse repos. This came after a net injection of 90 billion yuan Friday and 20 billion yuan Thursday.
The People's Bank of China conducted 150 billion yuan of reverse repos, a process by which the central bank purchases securities from commercial banks through bidding with an agreement to sell them back in the future. /VCG Photo
The People's Bank of China conducted 150 billion yuan of reverse repos, a process by which the central bank purchases securities from commercial banks through bidding with an agreement to sell them back in the future. /VCG Photo
The open market operation pushed up the "Shanghai Interbank Offered Rate" (SHIBOR) for three-month loans to its highest point since September 12.
The SHIBOR for one-month loans rose slightly to 4.02 percent.
Monday's operations included seven-day reverse repo priced to yield 2.45 percent, 14-day contracts with a yield of 2.6 percent and 63-day contracts with a yield of 2.9 percent, all unchanged from previous operations, according to a central bank statement.
Despite the injection, in Monday's interbank market the overnight SHIBOR, which measures the cost at which banks lend to one another, climbed to 2.72 percent, the highest in more than two weeks.
The overnight SHIBOR was up 0.19 basis points at 2.7200 percent. The one-week term rate rose 0.92 basis points to 2.8880 percent. The SHIBOR for three-month loans increased 0.25 basis points to 4.3926 percent.
China set the tone of its 2017 monetary policy as prudent and neutral, keeping appropriate liquidity levels but avoiding excessive liquidity injections. /VCG Photo
China set the tone of its 2017 monetary policy as prudent and neutral, keeping appropriate liquidity levels but avoiding excessive liquidity injections. /VCG Photo
The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in interest rates or reserve requirement ratios.
China set the tone of its 2017 monetary policy as prudent and neutral, keeping appropriate liquidity levels but avoiding excessive liquidity injections.
The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in the benchmark interest rates or reserve requirement ratios.
China has decided to pursue a "prudent and neutral" monetary policy in 2017, applying a full range of policy instruments to maintain basic stability in liquidity and hold interest rates at an appropriate level.
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Source(s): Xinhua News Agency
,China Daily