China-Singapore Jingwei Client, February 9th, the central bank's website announced on the 9th that in order to maintain stable liquidity before the Spring Festival, the People's Bank of China launched a 50 billion yuan reverse repurchase operation on February 9, 2021 through an interest rate bidding method.
On the 9th, 80 billion yuan of reverse repurchase expired, with a net return of 30 billion yuan.
Source: Screenshot of the central bank website
According to Wind, the central bank’s open market this week (February 8 to February 14) totaled 280 billion yuan of reverse repurchase maturities. The maturity scales from Monday to Wednesday are 100 billion, 80 billion and 100 billion yuan, respectively. On Friday, the Chinese financial market was closed for the Spring Festival holiday.
The Sino-Singapore Jingwei client noted that since 2021, the central bank has carried out reverse repurchase operations on an average working day, mainly with 7-day reverse repurchase operations.
February 4th was the first 14-day reverse repurchase operation by the central bank this year. On February 5th and 7th, the central bank continuously carried out 14-day reverse repurchase operations.
On February 8, the official website of the central bank announced that the demand for cash withdrawals from residents before the Spring Festival this year was significantly less than in previous years, and fiscal expenditures before the holiday increased significantly.
In order to maintain stable liquidity before the Spring Festival, the central bank launched a reverse repurchase operation of 110 billion yuan by way of interest rate bidding on February 8, with a period of 7 days and the winning interest rate of 2.2%.
Tao Jin, deputy director of the Macroeconomic Research Center of the Suning Institute of Financial Research, believes that the central bank's 14-day reverse repurchase operation will prevent the invested funds from expiring before the Spring Festival, aiming to meet the liquidity needs before and during the Spring Festival.
Tao Jin said that although the net investment scale is not large, the extended period operation still reflects the central bank's policy will to protect market liquidity to a certain extent.
This is not to inject incremental funds into the market, but to maintain liquidity near a reasonable level.
In terms of funds, the balance of funds on February 8 was slightly loose, and most of the main inter-bank repurchase rates fell.
Zhou Maohua, an analyst at the Financial Markets Department of Everbright Bank, told the media that as the Chinese New Year approaches, the central bank will moderately increase net capital investment to stabilize market capital.
However, in terms of net input, the central bank is cautious.
On the one hand, compared with 2020, the amount of open market operation tools expiring in February 2021 is relatively small. At the same time, the domestic encouragement to celebrate the Spring Festival on the spot, the demand for cash withdrawal around the Spring Festival may be less than in previous years.
Therefore, although the central bank's operation volume is not as good as last year, the funds are stable around the Spring Festival.
(Zhongxin Jingwei APP)