China’s central bank, the People’s Bank of China (PBOC), has injected 800 billion yuan (approximately 110.32 billion USD) into its banking system in March through direct reverse repos.
Market participants have closely monitored PBOC’s open market operations recently, as a shortage of cash in the bond market has led to sell-offs and a search for hints of policy easing to guide investment directions.
With 700 billion yuan of one-month simple repos maturing this month, yesterday’s operation implied that PBOC had injected only a net 100 billion yuan via this tool, marking the smallest net injection since its inception in November last year.
PBOC stated that these repo operations aim to “maintain reasonable ample liquidity in the banking system.” The tenors for this month’s repos were three and six months.
Last week, PBOC issued 450 billion yuan (approximately 62.03 billion USD) in medium-term loans one year out, providing liquidity relief to bond investors. The yield on China’s 10-year Treasury fell from its three-month peak to around 1.8 percent.
“While confidence in economic growth and the stock market is boosted by increasingly favorable tailwinds, interest rates in China must remain low for longer to allow the economy to overcome the deflationary downward cycle,” said Ze Yi Ang, portfolio manager at Allianz Global Investors.
China, Japan, and South Korea to Respond Jointly to U.S. Tariffs
China, Japan, and South Korea agreed to respond jointly to U.S. tariffs, according to an account linked to China’s state-run CCTV.
The comments came after the three countries held their first economic dialogue in five years on Sunday, aiming to facilitate regional trade while Asian export powerhouses prepare against U.S. President Donald Trump’s tariffs.
Japan and South Korea wish to import semiconductor raw materials from China, and China is also interested in purchasing chip products from Japan and South Korea, according to accountant Yuyuan Tantian on Weibo. (Reuters)
