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PBOC injects funds via reverse repos

China's central bank continued to inject funds into the financial system through open market operations on Wednesday to offset liquidity pressure. The People's Bank of China pumped 130 billion yuan ($20.3 billion) into the market through reverse repos, with 60 billion yuan of contracts maturing, leading to a net injection of 70 billion yuan. This followed a net injection of 30 billion yuan on Tuesday. A reverse repo is a process by which the central bank bids and buys securities from commercial banks, with an agreement to sell them back in the future. Analysts believe the moves were made to stabilize market expectations as banks' liquidity demands could increase due to taxes and required reserves as well as more maturing securities.