BEIJING – China’s central bank on Tuesday boosted market liquidity via open market operations, following net cash withdrawals for six consecutive working days.
The People’s Bank of China injected 50 billion yuan (about 7.5 billion U.S.
dollars) through seven-day reverse repos, a process in which the central bank purchases securities from commercial banks with an agreement to sell them back in the future.
The interest rate of the reverse repos was 2.45 percent, unchanged since mid-March.
The injection was offset by 40 billion yuan in maturing reverse repos, leading to a net addition of 10 billion yuan into the market.
The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in the benchmark interest rates or reserve requirement ratios.
China has decided to pursue a “prudent and neutral” monetary policy in 2017, applying a full range of policy instruments to maintain basic stability in liquidity and hold interest rates at an appropriate level. – Xinhua