China Extends Cash Injections to Curb Month-End Rate Swings

(Bloomberg) — China’s central bank boosted short-term cash injection into the banking system for the 11th straight day, the longest streak this year, as it sought to calm investor concerns over a liquidity squeeze around month-end.

Most Read from Bloomberg

The People’s Bank of China provided more short-term cash through seven-day reverse repurchase agreements on Friday, bringing the net injection tally since April 17 to 673 billion yuan ($97 billion), Bloomberg calculations show.

“The injections reflect PBOC’s continued willingness to keep liquidity ample at appropriate levels, and to iron out volatilities in funding costs triggered by seasonal factors such as tax payments and month-end cash hoarding,” said Zhou Maohua, analyst at China Everbright Bank Co. Ltd.

Despite the economic recovery signs lately, the central bank may still prioritize continuity of monetary policy and refrain from cutting liquidity support too soon, he added.

The move followed remarks from a PBOC official last week that the central bank will maintain reasonable growth in credit and make sure interest rate levels are appropriate. Benign cash conditions at month-end and lingering concerns over economic risks fueled a gain in China bonds this week, as 10-year sovereign yield declined to the lowest since November.

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.