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


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.