Beijing pumps US$14b into marts
SHANGHAI: China's central bank conducted its largest one-day fund injection in seven months yesterday, easing fears of quarter-end cash crunch such as the one that roiled global markets in late June.
The People's Bank of China injected US$14.4 billion (RM46.2 billion) into the money markets through six-day reverse bond repurchase agreements yesterday, its largest one-day injection since the week before the Spring Festival holiday in February.
"The central bank's move has settled people's mood. The (funding) market has improved compared to yesterday," said a trader.
The interest rate that banks charge each other for overnight loans slipped, declining to 3.64 per cent on a weighted average basis, down from 3.87 per cent at Monday's close.
The benchmark seven-day bond repo rate edged up but remained in a comfortable range, hitting 4.53 per cent yesterday from 4.40 per cent on Monday.
Chinese banks typically hoard cash near quarter-end in order to meet regulatory checks and fund payouts on maturing wealth management products. That contributed to a spike in rates at the end of June, when the benchmark seven-day cash rate hit 30 per cent for some trades.
Market participants widely viewed the June squeeze as a warning by regulators for banks to curb risky off-balance-sheet lending.
Credit data showed that total social financing nearly doubled in August from July.
Some observers interpreted looser liquidity last month as a sign that authorities had opened the credit tap after the June liquidity crunch to ensure that the economy's slowdown would not be too sharp in the run-up to a government meeting on economic reform in November. Reuters