PBOC Makes Net Injection of $2.92 Billion via OMO on 3 September

The Chinese central bank made a net injection of 20 billion yuan (approx. USD$2.92 billion) via open market operations on 3 September.

On 3 September the People’s Bank of China (PBOC) announced that it had undertaken 120 billion yuan in 7-day reverse repo operations with a rate of 2.20%, on par with the rate for its last operation.

Given that 100 billion yuan in reverse repos matured on 3 September, the operation resulted in a net injection of 20 billion yuan.

PBOC said that the reverse repo operation was for the purpose of maintaining rational liquidity in the Chinese banking system.

In August PBOC engaged in re­verse repo op­er­a­tions for 15 consecutive work days, for a cu­mu­la­tive amount 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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