PBOC increased liquidity today, using both 7-day and 14-day reverse repos

Dhwani Mehta FXStreet

On Wednesday, the People's Bank of China (PBOC) injected funds into money markets today, increasing liquidity, using both 7-day and 14-day reverse repos

At the yuan fix today, the Chinese central bank injected funds using the 14-day instruments.

In Open Market operations (OMOs), the PBOC inject 90bn yuan through 7-day reverse repos and 50bn with 14-day reverse repos

Headlines via Bloomberg:

PBOC using 14-day reverse-repurchase agreements for the first time since February

Amid speculation policy makers are looking to increase the use of more expensive, longer-term funding to cool a bond rally.

Liu Changjiang, a bond analyst at Soochow Securities Co. in Shanghai, noted, “"The offering of long-term funds seems to be sending a signal to warn market participants not to get excessively leveraged. The follow-up impact hinges on what the PBOC plans to do next - whether it will continue to offer 14-day reverse repos and any other policies - so the market can gauge its determination."

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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