PBOC cash pump still whirring

Courtesy of Also Sprach Analyst.

The People’s Bank of China injected RMB225 billion of liquidity in yesterday’s open market operation.

PBOC offered RMB140 billion of 7-day reverse repo at 3.35% and RMB85 billion of 14-day reverse repo at 3.45%. The interest rates are unchanged in today’s operation.

For the full week, however, PBOC remains in a net withdrawal position, with RMB70 billion of liquidity being drained from the banking system as this week’s total reverse repo injection  and expiring central bank bills are not enough to offset the expiring reverse repo.

Meanwhile, although short-term interest rates remain well below the pre-holiday cash crunch highs, they are rising this week after two consecutive weeks of net liquidity withdrawal.