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China’s central bank injects liquidity into market

China’s central bank injected liquidity into the banking system through open market operations on Wednesday.

The People’s Bank of China injected 120 billion yuan (about 18.25 billion U.S. dollars) into the market through seven-day reverse repos at an interest rate of 2.2 percent, according to a statement on its website.

The move was intended to maintain reasonably ample liquidity in the banking system, the central bank said.

With 100 billion yuan of reverse repos maturing on the same day, the move led to a net liquidity injection of 20 billion yuan from the market.

A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

China pursues a prudent monetary policy in a more flexible and appropriate way, according to this year’s government work report.

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