PBOC Injects Liquidity For Fourth Day

The PBOC injected CNY 20bn into the financial system, the fourth straight day of injections and bringing net additions in the last four sessions to CNY 80bn. Repo rates are higher in early trade, the overnight repo rate up 25 bps at 1.8213% but well off last week's highs above 2.36%. The 7-day repo rate is down 45bps after jumping into the close yesterday.

• There were reports in the Financial News that the PBOC is likely to continue small liquidity injections via reverse repos heading into month and quarter-end. The piece cites Dong Qi, an analyst at Guotai Junan Securities, saying liquidity around the end of second quarter should not be a concern and the recent injections (CNY 60bn in the three sessions before Tuesday) is to offset possible liquidity fluctuations around mid-year.
• Elsewhere, the PBOC concluded a quarterly meeting late yesterday where the Central Bank stuck to familiar refrains. It said China will make its monetary policy flexible, targeted and appropriate and will keep interbank liquidity reasonable adding that internal and external environment facing the Chinese economy still has risks. The Bank also said it would guide financial institutions to step up medium- and long-term loans to manufacturers as well as to private enterprises, in a bid to match their contributions to the Chinese economy. A recent tweak of the deposit-rate ceiling could unleash potential from previous LPR reforms, which could lead to reduced loan rates for businesses.