China’s central bank came out of its normal pattern of daily liquidity operations, as it boosted a cash injection into the financial system, smoothing market concerns brought by regulatory crackdowns.
- The People’s Bank of China pumped $4.6 billion of liquidity into the financial system with seven-day reverse repurchase agreements. The move also came amid seasonal tightness in liquidity ahead of the month end.
- The cash injection is an indicator that regulators are seeking to restore calm in the financial markets after reforms in China’s private education sector and rumors that U.S. funds are offloading China and Hong Kong assets triggered a sharp selloff.
- Interbank borrowing costs slipped Thursday, with the overnight repurchase rate dropping the most in nearly a month. The yield on China’s 10 year government bonds dropped for the first time in 3 days.
The CSI 300 Index rebounded from a bear market. There was increased demand for a seven-day repo this morning as banks sought cash beyond the end of month. Offshore yuan climbed slightly 0.2% to its highest in a week.
CSI 300 Index up 1.89%.
Source: Bloomberg.
