China’s central bank increases short-term liquidity injection ahead of holidays

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China’s central bank stepped up its liquidity injection on Wednesday, offering new funds to the banking system for the first time this year to help meet seasonal demand for cash ahead of the long holidays.

The People’s Bank of China (also known as PBOC) injected 87 billion yuan ($12.84 billion) through reverse repurchase agreements into open market operations, including 65 billion yuan at seven days and another 22 billion yuan at 14 days, according to a statement posted online.

The PBOC added that the measure was intended to “maintain reasonably ample liquidity” in the banking system.

Market participants believe the increased cash injection is meant to help offset increased demand for cash ahead of the Lunar New Year holiday week, which begins on January 21 this year.

With 14 billion yuan in reverse reps due on Wednesday, the central bank pumped 71 billion yuan net into the day, marking the first net daily supply of funds this year.

(1 dollar = 6.7770 Chinese yuan)

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