Business / Economy

China continues cash injections to ease liquidity strains

(Xinhua) Updated: 2015-09-01 17:21

BEIJING -- China's central bank continued to pump billions of yuan into the financial system on Tuesday to ease liquidity strains.

The People's Bank of China (PBOC) conducted 150 billion yuan ($23.6 billion) of seven-day reverse repurchase agreements (repo), a process in which the central bank purchases securities from banks with an agreement to resell them in the future.

The reverse repo was priced to yield 2.35 percent, unchanged from the yield of the last reverse repo conducted by the PBOC on Aug 27.

The latest move followed four reverse repos in the past two weeks that injected a total of 540 billion yuan into the market, as liquidity has tightened recently due to dropping new yuan funds outstanding for foreign exchange and a depreciating Chinese yuan.

The PBOC also pumped in 340 billion yuan in the past week through short-term liquidity operations, another tool for banks to borrow from the central bank.

In Tuesday's interbank market, the benchmark overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one another, increased by 2 basis points to 1.821 percent.

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