Chinese Central Bank On Track to Extend OMO Absence to 11 Days Straight

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The People’s Bank of China has indicated that it will refrain from engaging in open market operations for the 11th consecutive trading day on Monday, 8 January.

PBOC cited the “relatively high” level of liquidity in China’s banking system as the reason for the continued absence of open market operations.

As a consequence China’s banking system will set a net decline in liquidity of 40 billion yuan (approx. USD$6.17 billion), as the equivalent amount of reverse repo agreements mature.

The move follows a net drainage of 510 billion yuan from the Chinese money market during the first week of 2018, as well as a drainage of 65 billion yuan in 2017 as a whole, as China’s financial regulators seek to deleverage the economy.

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