PBC restarts open market operations to boost liquidity

Source:Xinhua - Global Times Published: 2018/7/12 20:28:41

China's central bank restarted reverse repo on Thursday to offset the impact of maturing securities, after halting such operations for five consecutive working days.

The operation includes 30 billion yuan ($4.5 billion) worth of seven-day reverse repo priced to yield 2.55 percent, offsetting the 30 billion yuan worth of maturing contracts on Friday, according to the People's Bank of China (PBC), the country's central bank.

A reverse repo is a process by which the central bank bids and buys securities from commercial banks, with an agreement to sell back in the future.

The central bank has been refraining from open market operations since last Thursday after the PBC reduced the reserve requirement ratio for some commercial banks by 50 basis points, releasing a total of 700 billion yuan into the banking system.

The bank said that the cut, the third this year following reductions in January and April, was "a targeted, precision regulation" to boost funding for small and micro firms as well as to support the debt-to-equity swap program. China will maintain a prudent and neutral monetary policy in 2018.

Posted in: MARKETS

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