The People’s Bank of China (PBOC) launched a seven-day reverse repurchase operation of 100 billion yuan in the form of an interest rate tender at 2.20 percent, unchanged from the previous bid.
Source: official website of the central bank
According to Wind data, a total of 180 billion yuan of reverse repos matured today, offsetting 100 billion yuan of reverse repos by the central bank, resulting in a net return of 80 billion yuan on the day.
According to the previous announcement of the People’s Bank of China, since January 27, the People’s Bank of China has ended the “land quantity” reverse repurchase, and the liquidity supply has gradually warmed, and the large-scale supply has resumed for several consecutive working days. Of this amount, 180 billion yuan was launched on January 27, 80 billion yuan on February 2, 100 billion yuan on January 28 and 29, and on February 1 and 3.
The Securities Times reported that, with last week and this week’s liquidity release “a cold and a warm” reversal of the operation, the current market on this year’s monetary policy operation orientation gradually formed rational expectations.
On the financial side, the “tight money” situation has been alleviated. The Shanghai interbank offered rate, or Shibor, fell in several categories as of 11 a.m. Wednesday, according to the China Foreign Exchange Trade System. Among them, the overnight variety was down 45.4bp to 1.859%, the 7-day variety was down 9.5bp to 2.146%, and the 14-day variety was down 13bp to 2.585%.
In addition, according to Wind data, the overnight rate (DR001) and the seven-day rate (DR007) of pledged repo funds for financial institutions of interbank deposits have declined. At press time, DR001 was down 39.02bp to 1.8446% and DR007 was down 12.34bp to 2.1176%.
It is understood that according to the usual practice in previous years, the central bank will carry out the 14-day reverse repo operation before the Spring Festival to meet the cross-section fund needs of the market. For this year why the central bank has not carried out the 14-day reverse repurchase operation, Everbright Securities that has not reached the time window. Everbright Securities pointed out that on the one hand, the 14-day period of funds released before January 28 does not play a role in the Spring Festival; On the other hand, the 14-day maturity of solstice on January 28 and February 4 will be concentrated on the first trading day after the holiday (that is, February 18), which may bring the pressure of concentrated rollover on that day. Slightly later a few days can be put as far as possible to spread the maturity date, more reasonable at the mercy of liquidity.
As for the future monetary policy, Li Yizu, a research fellow at the Research Institute of the Bank of China, previously pointed out that the future monetary policy is expected to remain prudent, while focusing more on structural policies. On the basis of the extension of the two monetary policy tools directly aimed at the real economy, we will continue to support the development of small and medium-sized enterprises with structural monetary policy tools such as supporting agriculture, supporting small businesses and relending.
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