Chinaâ€™s central bank added a record 290 billion yuan ($46 billion) to the financial system using reverse-repurchase agreements, seeking to address a cash squeeze in the run-up to a weeklong holiday.
The Peopleâ€™s Bank of China conducted 190 billion yuan of 28-day reverse repos and offered 100 billion yuan of 14-day contracts, according to a trader at a primary dealer required to bid at the auctions. Todayâ€™s total is the highest for a single day in Bloomberg data going back to 2004.
The Chinese flag flies outside the headquarters of the People’s Bank of China in Beijing.
â€œRecord amounts of reverse repos are to meet the surge in cash demand before the quarter-end and the holidays,â€ said Liu Junyu, a bond analyst in Shenzhen at China Merchants Bank Co., the nationâ€™s sixth-biggest lender. â€œAs the central bank steps up adding funds through reverse repos, itâ€™s unlikely to cut the reserve ratio this month.â€
The seven-day repurchase rate, which measures interbank funding availability, gained 22 basis points to 4.73 percent as of 11:07 a.m. in Shanghai, the highest level since June 28, according to a weighted average compiled by the National Interbank Funding Center.
The central bank kept the yields on 28- and 14-day reverse repos unchanged at 3.6 percent and 3.45 percent, respectively, the trader said. Chinaâ€™s financial markets will be shut from Oct. 1 to Oct. 5 for the National day and mid-autumn holidays.
Via – Bloomberg
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