Chinese Central Bank Lifts Rate for 63-day Reverse Repos


China’s central bank has raised the interest rate for 63-day reverse repos after reintroducing them following a month and a half absence.

On Tuesday 16 January the People’s Bank of China undertook 320 billion yuan in 7-day, 14-day and 63-day reverse repos, for a net liquidity injection of 270 billion yuan.

It was the first time since November 30 that PBOC made use of the 63-day reverse repo, with the central bank raising the interest rate for the instrument by 5 basis points to 2.95%.

The increase brings the 63-day reverse repo rate in line with rates for other maturities, which were lifted by 5 basis points back in December just following the US Federal Reserve hike.

China Merchants Securities macro-analyst Yan Ling (闫玲) said to 21st Century Business Herald that while funds are likely to remain stable prior to the Chinese New Year, fluctuations can be expected following the vacation.

According to Ling PBOC has customarily undertaken measures to stabilise liquidity prior to the vacation, while rates tend to normalise following the Chinese New Year.