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China injects fresh cash into banks | China injects fresh cash into banks |
(about 2 hours later) | |
China's central bank has injected fresh liquidity into the country's large commercial banks ahead of the Lunar New Year holiday later this month. | |
The bank did not say how much cash it injected, but said the move was aimed at ensuring the "stability" of the monetary market ahead of the holidays. | |
The Lunar New Year is China's most important festival and sees increased demand for cash among consumers. | The Lunar New Year is China's most important festival and sees increased demand for cash among consumers. |
The move also comes as China's key interbank lending rate rose on Monday. | The move also comes as China's key interbank lending rate rose on Monday. |
The seven-day repurchase rate, a key gauge of liquidity among banks, rose to nearly 6.5% on Monday, up from 4% earlier this month. | The seven-day repurchase rate, a key gauge of liquidity among banks, rose to nearly 6.5% on Monday, up from 4% earlier this month. |
The People's Bank of China (PBOC) said it had injected the funds via short-term liquidity operations on Monday. | |
These operations are generally conducted by the central bank with individual lenders behind closed doors. | These operations are generally conducted by the central bank with individual lenders behind closed doors. |
'Significant steps' | |
The central bank said it would inject further liquidity into the financial system via short-term loans to banks, known as reverse repurchase agreements, on Tuesday. | |
Reports on Tuesday morning indicated the bank had added nearly 255bn yuan ($42bn; £26bn) to the financial system via such agreements. | |
The move, coupled with the injection it carried out on Monday, saw the interbank lending rate come down. | |
The seven-day repurchase rate dropped to 5.25% on Tuesday. | |
The state-owned Xinhua news agency said the central bank had also urged financial institutions to "strengthen liquidity and asset management to safeguard monetary market stability" ahead of the Lunar New Year. | |
"These are significant steps by the PBOC," said Zhang Zhiwei, an economist with Nomura, in Hong Kong. | |
"These measures should help to reduce the liquidity risk in the interbank market and the default risk in the corporate sector over the next several weeks." |
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