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China central bank resumes cash injections into money market

Updated: Apr 13,2017 2:38 PM     Xinhua

BEIJING — China’s central bank on April 13 resumed cash injections into the financial system via pledged supplementary lending and reverse repos, after a 13-day halt.

The People’s Bank of China pumped 83.9 billion yuan ($12.2 billion) through pledged supplementary lending and 110 billion yuan through reverse repos.

The operations included 70 billion yuan of 7-day reverse repo priced to yield 2.45 percent, 20 billion yuan of 14-day contracts with a yield of 2.6 percent, and 20 billion yuan of 28-day agreements with a yield of 2.75 percent.

The restarting of such operations came after 40 billion yuan of reverse repos and 217 billion yuan from the medium-term lending facility matured on April 13, adding liquidity strain in the market.

China’s central bank is being pulled in many directions by competing objectives, but nimble use of diverse monetary tools is helping to ease tensions and meet the country’s monetary goals.

Over the past year, the bank has steered clear of interest rate cuts and avoided tinkering with reserve requirement ratios. An expanded range of tools, such as reverse repos and lending facilities, are managing liquidity and supporting growth.

China’s monetary policy in 2017 is set to be “prudent and neutral,” keeping appropriate liquidity levels and avoiding large injections.