PBOC Withdraws USD7.5 Billion From Market via Maturing Reverse Repos
Liao Shumin
/SOURCE : Yicai
PBOC Withdraws USD7.5 Billion From Market via Maturing Reverse Repos

Yicai Global) Sept. 1 -- China's central bank, the People's Bank of China (PBOC), has withdrawn CNY50 billion (USD7.5 billion) from the financial system via maturing reverse repos on Friday.

PBOC halted all reverse repos for the second straight day, but previous reverse repos of CNY50 billion matured today.

Despite massive fiscal spending at the end of August, offset by maturing reverse repos, and the local government bond issuance payment, the liquidity in the interbank market is adequate. Therefore, PBOC halts open market operations today, said China's central bank.

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, short-, medium- and long-term interest rates were cut down.  It indicates that the interbank market has adequate liquidity today although the central bank has withdrawn funds from the market for three days in a row.

The overnight "Shanghai Interbank Offered Rate" (SHIBOR) is down 1.80 basis points to 2.8130 percent. The one-week term rate decreased 1.15 basis points to 2.8764 percent. The Shibor for one-month loans remained steady at 3.8920 percent

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