(13 June 2014 – China) The People’s Bank of China (PBoC) stepped up fund injections to help lenders meet mid-year cash demand, leading to China’s money-market rate declining overnight on 12 June.
According to the PBoC website, it issued 40 billion yuan (A$6.8 billion) of 28-day repurchase agreements that drain funds at 4 percent.
That was outweighed by maturing repo contracts, resulting in net additions of 104 billion yuan this week, compared with 73 billion yuan in the previous period, according to data compiled by Bloomberg.
“Money-market rates will probably remain low with the help of the PBoC’s operations,” Chen Long, a bond analyst at Bank of Dongguan Co. in Guangdong province told Bloomberg.
“Quarter-end cash demand will have some impact on interbank liquidity, but we’re still optimistic.”
The PBoC said in a separate statement that it will expand financing channels for companies, and encourage policy lenders to support exporters.
In a statement posted on the central government’s website on 11 June, Premier Li Keqiang said the Chinese government will cut taxes for some companies, spend more to develop the Yangtze River region, and boost investment in railways, highways, and waterways.