China's Central Bank Injects Fresh Funds via Open Market Operations
Liao Shumin
/SOURCE : Yicai
China's Central Bank Injects Fresh Funds via Open Market Operations

(Yicai Global) Aug. 29 –- China's central bank, the People's Bank of China (PBOC), has injected CNY10 billion (USD1.5 billion) cash into the financial system via open market operations on Tuesday.

PBOC conducted 7-days reverse repo of CNY50 billion, offset by CNY40 billion of previous reverse repos maturing today. PBOC withdrew CNY100 billion from the market yesterday.

Reverse repo is a process by which the central bank purchases securities from commercial banks through bidding with an agreement to sell them back in the future. The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in interest rates or reserve requirement ratios.

In the interbank market today, all short-, medium- and long-term interest rates increased.

The overnight "Shanghai Interbank Offered Rate" (SHIBOR), a simple, no-guarantee, wholesale interest rate calculated by arithmetically averaging all the interbank yuan lending rates offered by the price quotation group of banks with a high credit rating, increased 7 basis points to 2.9220 percent. The one-week rate increased 1.46 basis points to 2.9210 percent. The Shibor for one-month loans rose 0.47 basis point to 3.8962 percent.

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Keywords: Pboc , Central Bank , Open Market Operation , Cash Injection , Reverse Repo , Shibor