China Central Bank Injects Almost 2 Billion into Banking System

China’s central bank continued to inject liquidity into the banking system on Tuesday, with 12 billion yuan (1.96 billion U.S. dollars) of 7-day reverse repurchase agreement (repo) operations.

The yield of the reverse repo, a process of central bank purchasing securities from commercial banks with an agreement to resell them at a future date, stood at 4.0 percent, according to a People’s Bank of China statement.

“The reverse repo rate fell 40 basis points from last week’s offering,” said Jiang Chao, an analyst with Haitong Securities.

“It indicated that the central bank aims to guide the market borrowing costs to a lower level,” he said.

Changes in the yields of reverse repo rate usually reflect how the central bank views the current borrowing costs in the market and how it will guide future lending rates.

via Xinhua

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza