China’s central bank will inject 120 billion yuan ($17.99 billion) into money markets on Thursday through seven-day reverse bond repurchase agreements, and an additional 60 billion yuan through 28-day reverse repos, traders said.
The People’s Bank of China (PBOC) last week utilised the 28-day facility to inject cash for the first time since February. The central bank also cut the guidance rate for this tenor to 2.55 percent from 2.60 percent.
Traders said the longer-tenor was used to avoid any cash crunch ahead of the National Day holiday from Oct. 1.
The central bank’s last use of the 28-day reverse repos in February also came ahead of the Lunar New Year holiday.
The PBOC injected a net 525.1 billion yuan into the banking system last week.
In early trade on Thursday, the volume weighted average of the seven day repo rate was at 2.25 percent, down 26.1 basis points from the previous closing average rate.