China central bank steps up short-term liquidity injection ahead of long holiday

CHINA’S central bank ramped up a liquidity injection on Wednesday (Jan 11), offering fresh funds to the banking system for the first time this year to help meet seasonal cash demand before the long holidays.

The People’s Bank of China (PBOC) injected 87 billion yuan (S$17.1 billion) through reverse repurchase agreements in open market operations, including 65 billion yuan through seven-day tenor and another 22 billion yuan through 14-day tenor, according to an online statement.

The PBOC added that the move was to “maintain reasonably ample liquidity” in the banking system.

Market participants believed the higher cash injection was meant to help counteract higher cash demand ahead of the week-long Chinese New Year holidays, which starts on Jan 21 this year.

With 14 billion yuan worth of such reverse repos maturing on Wednesday, the central bank injected a net 71 billion yuan on the day, making the first daily net fund offering this year. REUTERS