China’s PBOC Injects $72 Billion to Roll Over Medium-Term Funds
The loans, the second-largest of their kind on record, were offered Thursday just as 463 billion yuan of facilities come due.
(Bloomberg) -- China’s central bank added 500 billion yuan ($72 billion) to the financial system, more than offsetting the medium-term loans that were maturing Thursday.
The People’s Bank of China offered the one-year medium-term lending facilities at 3.3%, and sold 10 billion yuan of seven-day reverse repo at 2.55%, according to a statement. The loans, the second-largest of their kind on record, were offered Thursday just as 463 billion yuan of facilities come due.
The move also comes after the government’s first seizure of a bank in more than two decades last month drove up funding costs for smaller lenders. The additional funding was set aside for medium and smaller banks only, according to the central bank.
Thursday’s cash injection should be enough to ease liquidity concerns for now, according to Frances Cheung, head of Asia macro strategy at Westpac Banking Corp. "The market is optimistic that the central bank will be supportive, and the PBOC is unlikely to disappoint amid the current risk-off environment.”
China’s policy makers have boosted efforts to ensure sufficient liquidity in the past weeks after the takeover of Baoshang Bank Co. Investors remain jittery ahead of the Group of 20 summit in Japan this month, where President Xi Jinping is expected to meet his U.S. counterpart Donald Trump.
The yuan has traded in a tight range since mid-May while the yield on 10-year sovereign bonds fell 11 basis points last month. The onshore currency traded 0.05% weaker at 6.9122 per greenback on Thursday.
--With assistance from Helen Sun.
To contact the reporters on this story: Livia Yap in Singapore at lyap14@bloomberg.net;Claire Che in Beijing at yche16@bloomberg.net
To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, Magdalene Fung
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