BEIJING — China’s central bank on July 11 resumed open market operations after a 12 trading-day suspension, in a move to supplement market liquidity.
The People’s Bank of China (PBOC) pumped 40 billion yuan ($5.9 billion) into the financial system through reverse repos, according to a PBOC statement.
The operation offset maturing reverse repos that will drain the same amount of liquidity from the market on July 11.
The central bank had attributed the previous suspension to “relatively high” liquidity in the banking system before describing the liquidity as moderate on July 10.
Altogether 280 billion yuan of reverse repos and 179.5 billion yuan of medium-term lending facility loans are due to mature this week, putting pressure on market liquidity.
In the interbank market on July 11, the overnight Shanghai Interbank Offered Rate, which measures the cost at which banks lend to one another, rose 1.6 basis points to 2.549 percent.
China set the tone of its monetary policy in 2017 as prudent and neutral, keeping an appropriate liquidity level but avoiding excessive liquidity injections.
The central bank has tried to strike a balance between financial deleveraging, aimed at defusing risks, and shoring up economic growth.
Growth of China’s broad measure of money supply, M2, hit a record low in May. But authorities have been careful not to squeeze liquidity too much, to avoid dampening demand.
Early in June, the PBOC increased cash injections into the banking system to meet spiking liquidity demand typically seen in the middle of the year due to seasonal factors such as regulatory reviews and tax payments.