29 Oct 2013
China central bank restarts reverse-repo operations in confidence boosting attempt
FXstreet.com (London) - Despite the People’s Bank of China’s first bout of reverse-repo transactions in two weeks, Chinese banking liquidity continued to struggle.
At the same time, the PBoC moved to lower the CNY reference rate 0.06 percent to CNY6.1373 against the dollar in an attempt to remove some volatility.
Chinese banking conditions have been a source of concern for China’s trading partners with the Chinese central bank tightening the cash supply try and reign in any accelerating inflation. Official Chinese data showed year-on-year consumer price inflation nearing upper bounds of the PBoC’s target range, rising 3.1 percent mainly driven by food prices.
According to an announcement on the PBoC’s website, the central bank today conducted CNY13bn seven-day reverse-repo transactions. The relatively small transaction was an attempt to boost confidence, rather than reverse the two-week move to draw down the cash supply. CNY102.5bn has been removed from the money supply since the PBoC suspended its transactions thanks to maturing contracts.
PBoC open-market transactions have been a mainstay of Chinese monetary policy. Today’s move pushed the seven-day repo rate up 7 bps to 5 percent.
At the same time, the PBoC moved to lower the CNY reference rate 0.06 percent to CNY6.1373 against the dollar in an attempt to remove some volatility.
Chinese banking conditions have been a source of concern for China’s trading partners with the Chinese central bank tightening the cash supply try and reign in any accelerating inflation. Official Chinese data showed year-on-year consumer price inflation nearing upper bounds of the PBoC’s target range, rising 3.1 percent mainly driven by food prices.
According to an announcement on the PBoC’s website, the central bank today conducted CNY13bn seven-day reverse-repo transactions. The relatively small transaction was an attempt to boost confidence, rather than reverse the two-week move to draw down the cash supply. CNY102.5bn has been removed from the money supply since the PBoC suspended its transactions thanks to maturing contracts.
PBoC open-market transactions have been a mainstay of Chinese monetary policy. Today’s move pushed the seven-day repo rate up 7 bps to 5 percent.