Skip to content
Subscriber Only

PBOC Doesn't Offer Reverse Repos for First Time in Six Months

  • Interbank liquidity not tightened much: China Merchants Bank
  • Benchmark money-market rate extends decline for the year
Updated on

The People’s Bank of China refrained from offering reverse-repurchase agreements in open-market operations for the first time in six months, halting cash injections that helped drive borrowing costs lower amid the slowest economic growth in two decades.

The decision to withhold the short-term lending tool comes after their use was scaled back in Tuesday’s auction window, when 10 billion yuan ($1.5 billion) of seven-day agreements were made available. That compares with a total of 70 billion yuan at the Dec. 22 and Dec. 24 auctions and resulted in a net 60 billion yuan being drained from the banking system this week. Lenders’ demand for funds typically rises in the run-up to year-end liquidity checks by regulators.