China’s market liquidity will remain reasonably ample even as seasonal flows of money injected ahead of the Lunar New Year holiday are recouped, the official Shanghai Securities News said on Monday.
A large amount of cash will come back into the banking system, and a relatively big amount of treasury bonds will mature this week, replenishing liquidity, the newspaper said. The holiday started on January 31 and ended February 6.
In addition, the central bank, the People’s Bank of China (PBOC), will continue to use monetary policy tools such as open market operation flexibly to maintain sufficient liquidity, the newspaper said, citing analysts.
The PBOC pumped money into the banking system ahead of the holiday, when Chinese families boost spending on travel and gift-giving, putting pressure on liquidity.
The PBOC will roll out more policy measures to stabilise the economy and move ahead of the market curve as downward pressure persists, vice governor Liu Guoqiang said last month.
As China’s financial markets reopen on Monday after the seven-day holiday, the PBOC injected 20 billion yuan into the banking system via seven-day reverse repos.
- Reuters with additional editing by Jim Pollard
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