Photographer: Qilai Shen/Bloomberg

PBOC Adds Most Cash Since January Before Holidays, Quarter-End

  • Seasonal demand exacerbated with 2.3 trillion yuan NCDs due
  • Central bank was expected to step up injections, analyst says

China’s central bank boosted its cash injections by the most in eight months as funding demand increases before week-long holidays at the end of the quarter.

The People’s Bank of China added a net 300 billion yuan ($46 billion) through reverse-repurchase agreements on Monday, the biggest daily addition since Jan. 18, before a Lunar New Year break. The nation’s financial markets will be closed in the first week of October for the National Day holidays.

Cash demand tends to surge before the October break, with Chinese citizens stockpiling cash. The seasonal squeeze is expected to be more severe this year, with a record 2.3 trillion yuan of negotiable certificates of deposit maturing this month. The PBOC usually steps up the supply of money before week-long holidays.

“Boosting injections at this point will help maintain stability,” said Meng Xiangjuan, head of fixed-income research at Shenwan Hongyuan Group Co. in Shanghai. “The PBOC was expected to step up cash injections, considering demand before the quarter-end, the long holidays and NCD maturities.”

The interbank seven-day repurchase rate rose one basis point to 2.92 percent in Shanghai, according to weighted average prices. The overnight cost rose 11 basis points to 2.82 percent. The yield on 10-year government bonds climbed two basis points to 3.63 percent, data compiled by Bloomberg show.

— With assistance by Helen Sun

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