PBOC Seen Upping Reverse Repos on Rising Liquidity Demand: Daily

The People's Bank of China is likely to continue raising the scale of reverse repurchase agreements through the yearend to meet rising demand, extending the steady increase seen this month, the Economic Information Daily reported citing analysts. The central bank on Tuesday conducted CNY100 billion RR via open market operations, increasing from earlier daily scales such as CNY10 billion and CNY50 billion. The issuances of local government bonds are expected to cap this month, which will increase liquidity demand, while CNY1 trillion MLFs are also set to mature, the newspaper said. Policymakers will likely resist the use of cutting banks' reserve ratios and rates as they balance short and long-term economic goals, the newspaper said citing analyst Wang Yifeng of Everbright Securities. China will likely maintain prudent monetary policies next year and facilitate structural changes such as increased lending to SMEs and green industries, as well as staying on guard for changes in U.S. asset rates of returns and global capital movement, the newspaper said.