China’s Central Bank Injects Liquidity into Banking System with Reverse Repo Operations

The People’s Bank of China (PBOC) has conducted reverse repurchase operations worth 190.3 billion yuan (approximately $26.47 billion) for a seven-day term at an interest rate of 1.5%. This move, executed on Thursday, aims to maintain ample liquidity in the banking system as the month comes to a close.

In a statement, the central bank explained that the objective of these reverse repo operations is to ensure a reasonable and sufficient level of liquidity in the financial system. Reverse repos are a monetary tool in which the central bank purchases financial securities from commercial banks with an agreement to sell them back at a later date.

This operation is part of the PBOC’s ongoing efforts to manage the country’s money supply and stabilize the economy, particularly during periods of high demand for liquidity. The move reflects the bank’s strategy to support financial stability while responding to market needs and the broader economic environment.