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PBOC Shrinks Daily Liquidity Injections To Guide Market-Herald

MNI (Singapore)

Shrinking liquidity injections by the People’s Bank of China via open market operations is signaling that capital market interest rates may gradually return to policy interest rates, with a marginal tightening of liquidity, the 21st Century Business Herald reported citing analysts. This is more of the central bank's active response to tame the risk of weakening control over the banking system and rising bond market leverage, the newspaper said citing Gao Yu, chief analysts of Zheshang Securities. The PBOC only injected CNY3 billion seven-day reverse repos each day starting this week, much lower than the CNY100 billion daily injections in end-June, the newspaper said. The weighted average interest rate of DR007 closed at 1.5703% on Tuesday, still significantly lower than the central bank’s seven-day reverse repo rate of 2.1, the newspaper said.

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