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Wednesday, February 03, 2021, 12:10
PBOC conducts 100b yuan of reverse repos
By ​Xinhua
Wednesday, February 03, 2021, 12:10 By ​Xinhua

BEIJING - China's central bank on Wednesday conducted 100 billion yuan (about US$15.46 billion) of reverse repos to maintain reasonably ample liquidity in the banking system.

The interest rate for the seven-day reverse repos was set at 2.2 percent, according to a statement on the website of the People's Bank of China.

With 180 billion yuan of reverse repos maturing on the same day, the move led to a net liquidity withdrawal of 80 billion yuan into the market. That means 480 billion yuan will now come due before the Lunar New Year holiday starts next week

With 180 billion yuan of reverse repos maturing on the same day, the move led to a net liquidity withdrawal of 80 billion yuan into the market.

That means 480 billion yuan will now come due before the Lunar New Year holiday starts next week.

ALSO READ: China's loan prime rates remain unchanged

The overnight repo rate fell 39 basis points to 1.84 percent, in line for the lowest since Jan 15. The rate surged to 3.3433 percent last month, surpassing China’s 10-year government bond yield.

A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

China's central bank has pledged to make its prudent monetary policy more targeted and flexible to adapt better to the needs of high-quality development and put more focus on the efficiency of financial services to support the real economy. 

READ MORE: Stability remains watchword for monetary policy in 2021

The Securities Times, a national newspaper owned by the official People’s Daily, published a commentary Wednesday that said the central bank’s recent open-market operations are a sign it is seeking to keep liquidity “tightly balanced” to prevent risks stemming from leverage. State media last week published a prominent commentary effectively telling people not to worry about the availability of funds.

With Bloomberg inputs


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