China’s central bank continued to pump money into the financial system on Feb 2 through open market operations to offset a pre-holiday cash crunch.
The People’s Bank of China (PBOC) conducted 100 billion yuan ($15.2 billion) of reverse repurchase agreements (repo), in which central banks purchase securities from banks with agreements to resell them in the future.
The operations include a 14-day reverse repo priced to yield 2.4 percent and a 28-day reverse repo with a yield of 2.6 percent, each worth 50 billion yuan respectively, according to a PBOC statement.
The move followed a reverse repo of 10 billion yuan on Feb 1 and a net injection of 690 billion yuan through such operations last week.
The PBOC also used other tools, including standing lending facilities, medium-term lending facilities and pledged supplementary lending, to offer more than 1.5 trillion yuan for the market in January.
The money injection was aimed at easing a liquidity strain usually expected before the Chinese New Year, which will fall on Feb. 8 this time.
Following operations on Feb 2, the Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one another, fell 0.3 basis points to 1.984 percent.