People’s Bank of China injects RMB30 billion via open market operation18 October, 2012, 12:05. Posted by Zarathustra
People’s Bank of China conducts open market operation today, injecting RMB30 billion into the system.
Today’s operation included RMB20 billion of 7-day reverse repo at 3.35% and RMB10 billion of 14-day reverse repo at 3.45%. The rates are unchanged for this round of operation.
The the full week, PBOC has reverted back into net withdrawal mode. PBOC withdraw a net RMB221 billion of liquidity from the banking system this week, the first net withdrawal in 5 weeks. However, short-term interest rates remain low this week despite net withdrawal, indicating that the pre-holiday liquidity crunch is now truly over.
The recent strength of Chinese Yuan suggests that money might be once again flowing back into the country after QE-Infinity announcement. If this proves to be true, it will be positive for liquidity condition as well as the economy as a whole, and it will reduce the need for further easing, including injections through reverse repurchase operation.