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PBOC Drains Liquidity

CHINA RATES

The PBOC drained a net CNY 20bn of liquidity from the system via OMO's today, comes after drip feeding CNY 100bn of liquidity into the market in the five sessions to the end of June. Repo rates are lower today, the 7-day repo rate pulling back from multi-month highs to sit at 2.20% - in line with the PBOC's prevailing rate.

  • The latest MNI Liquidity Conditions survey shows liquidity conditions across China's interbank market were seen as ample into the June month end, with the People's Bank of China ensuring enough cash in the system for financial institutions to pass the quarter-end Macro Prudential Assessment (MPA). The headline Liquidity Condition Index edged down to 35.4 in June from last 41.7, with one third of the traders surveyed reporting improved condition with better liquidity. The higher the index reading, the tighter liquidity appears to survey participants.

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