China: PBOC Injects More Money Into Market
China’s central bank (PBOC) continued to pump money into the market to ease a liquidity strain last week.
The People’s Bank of China (PBOC) conducted RMB 395-B (US$61.16-B) of 7-day reverse repurchase agreements (repo) from Monday to Friday, a process in which central banks purchase securities from banks with an agreement to resell them in the future.
The reverse repos were all priced to yield 2.25%.
This week’s injections have resulted in a net RMB 15-B pumped into the market, offset by RMB 380-B in maturing reverse repos.
This follows a net injection of RMB 180-B into the financial system last week.
The continuous injections showed that the country’s money supply was a bit tight, analysts said.
Friday’s interbank market, the benchmark overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one another, fell to 2.014%. The rate reached 2.017% Thursday, the highest level in a month.
The Shibor for 2-week loans rose the most Friday, by 3.3 bpts to 2.821%.
By Tian Shaohui
Paul Ebeling, Editor
HeffX-LTN
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