China’s central bank has pumped 200 billion Yuan into the banking system via reverse repos to maintain liquidity.
With no reverse repos maturing on Tuesday, the People’s Bank of China injected a total of 200 billion yuan (about 28.3 billion U.S. dollars) into the market.
This was revealed on the website of the central bank.
The funds included 90 billion Yuan through seven-day reverse repos at an interest rate of 2.2 per cent and 110 billion Yuan of 14-day contract at an interest rate of 2.35 per cent.
The move is intended to maintain stable liquidity in the banking system, the central bank said.
A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.
China would pursue a prudent monetary policy in a more flexible and appropriate way, according to this year’s government work report.
The report said that the country would use a variety of tools including required reserve ratio reductions, interest rate cuts, and re-lending to enable M2 money supply and aggregate financing to grow at notably higher rates than 2019.