PBOC Steps Up Injections as Money Rate Rises to Three-Week High
- First weekly net addition after Lunar New Year holidays
- Tax payments, convertible bond sale drive demand for cash
China’s central bank used its open-market operations to increase the supply of cash in the financial system as demand driven by tax payments and convertible bond sales pushed the overnight money-market rate to a three-week high.
The People’s Bank of China auctioned 110 billion yuan ($17 billion) of seven-day reverse-repurchase agreements, compared with daily offerings of less than 50 billion yuan over the past two weeks. That resulted in a net injection of 85 billion yuan this week, the first addition since last month’s Lunar New Year holidays. Interbank borrowing costs tend to rise in the March-April period because commercial lenders deposit corporate tax payments with the PBOC. Huachuang Securities Co. estimates a convertible bond sale by Jiangsu Jiangnan Water Co. will freeze 200 billion yuan Friday.