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PBOC Injects 20bn Yuan Into Banks as Seven-Day Break Ends

Central bank expects a large amount of cash to come back into the banking system, while a relatively big amount of treasury bonds will mature this week, replenishing liquidity


Beijing is focusing more on propping up a slowing economy by keeping money rates low, traders said on Tuesday.
China's central bank drained short-term liquidity from the banking system for the first time in eight days on Monday. Photo: Reuters.

 

China’s market liquidity will remain reasonably ample even as seasonal flows of money injected ahead of the Lunar New Year holiday are recouped, the official Shanghai Securities News said on Monday.

A large amount of cash will come back into the banking system, and a relatively big amount of treasury bonds will mature this week, replenishing liquidity, the newspaper said. The holiday started on January 31 and ended February 6.

In addition, the central bank, the People’s Bank of China (PBOC), will continue to use monetary policy tools such as open market operation flexibly to maintain sufficient liquidity, the newspaper said, citing analysts.

The PBOC pumped money into the banking system ahead of the holiday, when Chinese families boost spending on travel and gift-giving, putting pressure on liquidity.

The PBOC will roll out more policy measures to stabilise the economy and move ahead of the market curve as downward pressure persists, vice governor Liu Guoqiang said last month.

As China’s financial markets reopen on Monday after the seven-day holiday, the PBOC injected 20 billion yuan into the banking system via seven-day reverse repos.

 

  • Reuters with additional editing by Jim Pollard

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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