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China Focus: Central bank eases liquidity through reverse repos

(Xinhua)

08:22, August 24, 2012

BEIJING, Aug. 23 (Xinhua) -- China's central bank pumped a record amount of liquidity into the money market this week through its open market operations on Thursday, a day after the central banker said he won't rule out using any monetary tools to spur the slowing economy.

The People's Bank of China (PBOC), the central bank, carried out reverse repurchase agreement (repos) operations worth 145 billion yuan (about 22.91 billion U.S. dollars), injecting 278 billion yuan of liquidity into banks this week after hedging funds due in the open market.

Yields of the 7-day and 14-day reverse repos stood unchanged at 3.4 percent and 3.6 percent, respectively.

On Tuesday, the PBOC carried out similar reverse repos operations worth 220 billion yuan.

The liquidity injected through the open market operations this week -- the second-highest weekly net injection this year -- was equal to cutting banks' reserve requirement ratio (RRR) by about 30 basis points.

Zhou Xiaochuan, the central bank governor, on Wednesday night said the PBOC will not rule out the use of any policy tools. He made the remarks in response to a question on whether the PBOC prefers to open market operations rather than cut the benchmark interest rates or the RRR on the sidelines of a ceremony.


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