SHANGHAI (Reuters) – China’s central bank on Wednesday made its biggest daily net cash injection via reverse repo operations on record, more evidence that authorities are shifting to policy easing to counter a slowdown in the world’s second largest economy.
The People’s Bank of China said the injection was to maintain “reasonably ample” liquidity in the banking system.
Liquidity - Support - Period - Tax - Payments
It attributed the generous liquidity support to the current peak period for tax payments, adding that “the banking system’s overall liquidity is falling rapidly”, according to a statement on its website.
In open market operations, the People’s Bank of China (PBOC) injected 350 billion yuan ($51.64 billion) through seven-day reverse bond repurchase agreements and 220 billion yuan through 28-day reverse repos.
Basis - PBOC - Yuan - Day - Reverse
On a net basis, the PBOC injected a net 560 billion yuan for the day, as 10 billion yuan reverse repos are set to mature on Wednesday.
December’s “abysmal” trade data and manufacturing contraction have “translated to a consensus by authorities that the economy needs more decided support and today’s large injection reflects that,” said Trinh Nguyen, senior economist for emerging Asia at Natixis in Hong Kong.
News - Economy - Help
“The news is clear – the economy needs help,” she added.
On Tuesday, Chinese officials signalled that they will roll out more stimulus measures in the near-term, after the shock contraction in December exports and...
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