BEIJING — The central bank pumped more money into the market to ease liquidity strain on Aug 27.
The People’s Bank of China (PBOC) conducted 150 billion yuan ($23.4 billion) of seven-day reverse repurchase agreements (repo), a process in which central banks purchase securities from banks with an agreement to resell them in the future.
The reverse repo was priced to yield 2.35 percent, down from the 2.5-percent yield on the net injection of 150 billion yuan using reverse repos on Aug 25, according to a PBOC’s statement.
Liquidity in the money market has tightened due to dropping new yuan funds outstanding for foreign exchange and a depreciating Chinese yuan.
Following the cash injection, in the interbank market on Aug 27, the benchmark overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one other, dropped by 2.7 basis points to 1.759 percent.