The People’s Bank of China (PBOC) stepped up its open market operations in the month of August with a consecutive 15-day run of activity.
On 27 August PBOC announced that it was undertaking 100 billion yuan in reverse repo operations via auction, with the winning rate emerging as 2.2%.
According to PBOC the latest open market operation was for the purpose of “maintaining rationally ample liquidity in the banking system.”
27 August marked the 15th consecutive work day that PBOC engaged in reverse repo operations, for a cumulative volume of 1.93 trillion yuan (USD$281.12 billion).
“With monetary policy stressing flexible moderation and targeted guidance, PBOC, the main reason that the central bank has expanded the vigour of reverse repo operations is to maintain rationally ample liquidity and avoid excessive tightening of funds, following a large scale increase in the supply of bonds and loans,” said Yuan Dongyang (袁东阳), a senior researcher with the China Chief Economist Forum (CCEF).
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