ZCZC
BCN-27
CHINA-BANK-LIQUIDITY
China’s central bank drains liquidity from market
BEIJING, Dec. 27, 2018 (BSS/Xinhua) – China’s central bank drained
liquidity from the financial system Wednesday.
The People’s Bank of China (PBOC) conducted 20 billion yuan (about 2.9
billion U.S. dollars) of seven-day reverse repos at an interest rate of 2.55
percent and 10 billion yuan of 14-day reverse repos at 2.7 percent, according
to a PBOC statement.
The PBOC said the operation was aimed to stabilize capital supply at the
end of the year and maintain reasonably affluent liquidity in the banking
system.
As reverse repos worth 40 billion yuan matured on Wednesday, the PBOC
effectively withdrew 10 billion yuan of funds from financial institutions.
Through reverse repos, the central bank purchases securities from
commercial banks through bidding, with an agreement to sell them back in the
future.
On Wednesday, the volume-weighted average of the benchmark 14-day repo rate
traded in the inter-bank market was up 148 basis points, the strongest rise
in five years.
BSS/XINHUA/HR/1500