PBOC Undertakes 2 Billion Yuan in 7-Day Reverse Repos on 4 August for Zero Liquidity Change

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The People’s Bank of China (PBOC)’s latest round of open market operations (OMO) have kept levels of liquidity in the Chinese banking system unchanged.

On 4 August PBOC announced that it would undertake 2 billion yuan in reverse repo auctions via rate bidding, with a bid rate of 2.10%, for the purposes of maintaining rationally ample liquidity in the banking system.

The move coincides with the maturation of 2 billion yuan in reverse repos on the same date, leaving market liquidity unchanged.

Short-term interest rates have declined over the past two days, with the overnight Shanghai Interbank Offered Rate (SHIBOR) falling 5 basis points to 1.026% as of 3 August. The 7-day Shibor fell 14.1 basis points to 1.385%.

On the repo market, the DR007 weighted average interest rate fell to 1.3%, just below the policy rate.