China's central bank continues to pump funds into market

Source: Xinhua| 2018-12-21 19:53:44|Editor: Li Xia
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BEIJING, Dec. 21 (Xinhua) -- China's central bank continued to inject liquidity into the money market through reverse repos Friday.

The People's Bank of China (PBOC) conducted 30 billion yuan (about 4.4 billion U.S. dollars) of seven-day reverse repos at an interest rate of 2.55 percent and 20 billion yuan of 14-day reverse repos at 2.7 percent, unchanged from previous operations.

The scale of the operations was smaller compared with the 150 billion yuan of reverse repos conducted Thursday.

The PBOC said in a statement that its interest payments to financial institutions on their required reserves could partially offset the impact of factors such as maturing treasury deposits at banks.

This week has seen a combined net injection of 600 billion yuan via the PBOC's open market operations, the largest weekly amount in 11 months.

Wang Youxin, a researcher with the Institute of International Finance at the Bank of China, said the PBOC's operations were aimed at meeting short-term liquidity demands near year-end and offsetting the impact of the U.S. interest rate hike.

The U.S. Federal Reserve on Wednesday raised short-term interest rates by a quarter of a percentage point, but signaled a slower pace of rate hikes next year as the U.S. economy is expected to cool.

Through reverse repos, the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.