China Injects Jumbo Liquidity of Approximately US $139 Billion to Stabilize Financial System 💸
The People's Bank of China (PBOC) has just injected fresh funds amounting to 1 trillion yuan or about US $139 billion into the market through a reverse repo scheme. This move was taken on Friday (07/06) as a quick response to increasing liquidity pressures within their financial system.
In recent days, signals of a crisis began to emerge from the spike in short-term borrowing costs as well as the rise in long-term bond yields. Interestingly, this fund injection was carried out earlier than the usual schedule, about 3 months ahead, which automatically indicates that the PBOC is quite vigilant about the current market conditions.
According to China's Chief Economist, Xiaojia Zhi, this move aims to alleviate market participants' concerns regarding the potential liquidity drought between banks approaching mid-year, especially with the large amount of Negotiable Certificates of Deposit (NCD) maturing in June.
This injection is expected to maintain systemic liquidity adequacy, curb volatility in the money market, and stabilize market participants' expectations overall.
