PBOC To Balance Liquidity Supply With Reduced Reverse Repo Injections-Journal

The PBOC’s move to deploy small injections via open market operations is a result of less demand from primary dealers amid ample liquidity conditions, not a sign of tightening, the China Securities Journal reported, citing analysts. The PBOC has been injecting just CNY2 billion in seven-day reverse repos on a daily basis since July 27, because the bids submitted by primary dealers have continued to decrease, the newspaper said. Increased fiscal spending, tax rebates and profits turned over by the central bank drove up liquidity supply in the money market in Q2, which left the average DR007 rate at 1.72%. Liquidity will remain loose in August, with a large amount of local government special bonds being allocated by the end of the month, the newspaper said, citing analysts.