Open market operations "overweight" at the end of 2021——
Stable funds and worry-free New Year's Eve
Our reporter Yao Jin
At the end of 2021, the People's Bank of China continued to "enhance" open market operations.
On December 31, 2021, the People's Bank of China issued an announcement stating that in order to maintain stable liquidity at the end of the year, a 100 billion yuan reverse repurchase operation was carried out through interest rate bidding on that day, with a period of 7 days and the interest rate maintained at 2.20%.
This is the central bank's four consecutive working days to carry out 100 billion-level reverse repurchase.
Starting from December 20, 2021, the open market operation has gradually increased, mainly as the scale of single-day reverse repurchase operations has increased from 10 billion yuan to 20 billion yuan, and the 14-day reverse repurchase operation has been restarted. Form a match with 7-day varieties.
Entering the last week of 2021, the scale of reverse repurchase operations increased to 50 billion yuan on December 27, and the reverse repurchase operations further increased to 200 billion yuan on December 28, setting a new high for single-day operations since late October.
Zhou Maohua, a macro researcher at the Financial Markets Department of China Everbright Bank, said that funds are subject to short-term disturbances in the New Year's Eve factors, and institutions have increased their demand for short-term funds for the New Year's Eve.
The increase in open market operations will release a signal that the central bank will maintain reasonable and sufficient liquidity, and it is expected that the funding will be stable for the new year.
Based on the experience of previous years, due to regulatory assessments, holidays and other factors, the demand for funds increased intensively at the end of the year, and the price of funds is prone to large fluctuations. The People's Bank of China will generally make timely moves to meet the liquidity needs of financial institutions.
For example, on December 27, 2021, DR007 (the inter-bank 7-day pledged repo rate) rose to 3.2%, which was significantly higher than the policy rate.
With the release of 200 billion yuan in reverse repurchase for two consecutive days on December 28 and 29, the current funding interest rate has dropped significantly.
As of 12:00 on December 31, the weighted average interest rate of DR007 was 2.2853%, basically the same as the 7-day reverse repo rate (2.2%).
The market generally believes that the People's Bank of China continues to increase short-term capital investment, which can obviously play a role in maintaining stability and avoiding excessive increases in capital prices.
"The market unanimously expects that the central bank will take care of the funding side. The central bank has increased the volume and reversed the scale of repurchase for two consecutive days, maintaining market liquidity, and market interest rates have dropped significantly, reflecting the stabilization of market funding." Zhou Maohua said.
Judging from the whole month of December 2021, the second full-scale RRR cut was implemented on December 15th. On that day, the People's Bank of China carried out a 500 billion yuan medium-term loan facility (MLF) operation, and restarted the 14-day reverse repurchase in the second half of the month. After the RRR cut, although the funding interest rate declined, it remained within the annual fluctuation range.
Sun Binbin, chief fixed-income analyst at Tianfeng Securities, believes that the reason is that the People's Bank of China has more precise and effective operations and that the inter-bank market has reasonable and sufficient liquidity.
"Affected by the New Year's Eve factors, it is normal for the interest rate of funds with maturities of more than 7 days before the holiday to rise, and there will naturally be a trend fall after the holiday. There is no need to pay too much attention to this." Sun Binbin said.
Looking to the future, Binbin Sun said that considering that the probability of net government bond financing in January 2022 will increase super-seasonally, and the potential disturbance factors such as cash withdrawal around the Spring Festival will be superimposed, it is expected that the People's Bank of China will be more proactive and effective in smoothing, and pegging interest rates to carry out precise operations. , Reduce market interest rate fluctuations.
"It is expected that the People's Bank of China will continue to flexibly respond to short-term liquidity disturbances to ensure stable funding and worry-free over the next year." Zhou Maohua said that taking into account the current downward pressure on the economy, the monetary policy will force steady growth, aggregate tools and Structural tools will play a good role, and market liquidity will remain reasonable and abundant.
Yao Jin