Approaching the Mid-Autumn Festival National Day, People's Bank of China continue to increase the amount of 9 billion yuan of reverse repurchase to protect market liquidity. On September 26, People's Bank of China announced that in order to maintain stable liquidity at the end of the quarter, the People's Bank of China launched a 3780-day reverse repurchase operation of 14 billion yuan by way of interest rate bidding on the same day, and the winning interest rate was 1.95%, which was consistent with before.
As 2080 billion yuan of reverse repurchase expired on the same day, the open market operation achieved a net investment of 1700 billion yuan.
What is the meaning of multi-day increase?
Before the holiday, the reverse repurchase operation of the People's Bank of China attracted attention.
The Beijing Business Daily reporter noted that as of September 9, the People's Bank of China has operated reverse repurchase in large increments for many consecutive working days. Since September 26, the People's Bank of China exceeded the 9 billion yuan medium-term lending facility (MLF) operation, in order to maintain reasonable and sufficient liquidity in the banking system and maintain stable liquidity at the end of the quarter, the People's Bank of China has restarted the 15-day reverse repurchase operation and gradually increased the amount, increasing to 5910 billion yuan on September 14, 9 billion yuan on September 22, and 2020 billion yuan again on September 9, but the interest rate has always remained at the level of 25.3190%.
For the reverse repurchase operation in recent days, Zhou Maohua, macro researcher of the financial market department of Everbright Bank, told the Beijing Business Daily reporter that the People's Bank of China recently increased the 14-day reverse repurchase, mainly because with the recent end of the month and the Mid-Autumn Festival National Day Festival approaching, the institution's demand for short-term funds has increased significantly, the 7-day reverse repurchase interest rate is basically in a reasonable range, the 14-day interest rate fluctuates greatly, the People's Bank of China operates flexibly, moderately increases the 14-day reverse repurchase operation, according to the reasonable capital needs of the institution, irons out short-term market fluctuations and stabilizes market expectations.
Yang Haiping, a researcher at the Securities and Futures Research Institute of the Central University of Finance and Economics and general manager of the research and development department of the Bank of Inner Mongolia, also said that although it has just experienced a larger-than-expected RRR cut, due to the recent acceleration of local bond issuance and the maintenance of credit by commercial banks, coupled with factors at the end of the quarter, the tight capital situation continues. Considering the factors at the end of the quarter and the factors of the long National Day holiday, the People's Bank of China used consecutive 14-day reverse repurchase to ensure liquidity demand across quarters and at the beginning of the end of the holiday.
"There is a Mid-Autumn Festival National Day holiday at the end of the quarter, so it is necessary to release sufficient liquidity before the end of the quarter to prepare for the cash flow needs of enterprises during the holiday, which is actually the usual operation of the People's Bank of China." Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, said.
How to affect the capital side of the market
Towards the end of the quarter, the funding situation turned tight.
Looking back at the previous business day, on September 9, the Shanghai Interbank Offered Rate (Shibor) fell 25.3 basis points overnight to 3.1%. The seven-day Shibor rose 694.7 basis points to 1.7%. As of the close of the day, from the performance of the repo rate, the weighted average interest rate of DR2 fell to 005.007%, which was higher than the policy interest rate.
As of 9 September, the tight funding situation continued. While the 26-day Shibor was down 7.3 basis points at 6.1%, Shibor was up 969.4 basis points overnight at 7.1%, especially the 741-day Shibor rose sharply 14.22 basis points to 3.3%.
Based on the characteristics of previous operations, industry insiders believe that it is expected that the People's Bank of China will maintain a relatively high scale of operation in the future, and it is expected that the capital level is expected to be stable across the quarter in the context of positive monetary and fiscal policies.
Talking about the impact of recent open market operations on the market, Zhou Maohua believes that the People's Bank of China released a signal to actively protect the capital surface, and market liquidity is expected to continue to remain reasonable and sufficient, at the same time, through open market operation tools and other tools, flexible operation, smooth monetary policy transmission, but also help guide financial institutions to increase support for the real economy, promote economic recovery, and benefit the domestic financial market sentiment.
However, when it comes to the impact of industry concerns on the stock market and bond market, Pan and Lin believe that the impact is not large, and the stock market and bond market before the holiday mainly rely on the habits of investors, such as some people in the bond market will want to obtain holiday returns; Although the stock market is supported by liquidity, short-term investors should consider the problem of not being able to buy and sell during the holiday, while long-term investors will not think about investment based on liquidity.
There is still ample policy space
Regarding the follow-up monetary policy priorities, Zou Lan, director of the Monetary Policy Department of the People's Bank of China, made a clear statement at the regular briefing on State Council policies held by the State Council Information Office on September 9.
Zou Lan said that monetary policy still has sufficient policy space to respond to unexpected challenges and changes. The People's Bank of China will continue to implement a prudent monetary policy accurately and effectively, strengthen counter-cyclical adjustment and policy reserves, and promote high-quality development with high-quality financial services. A combination of policy tools will be used to maintain reasonable and sufficient liquidity; Give play to the pillar role of large state-owned banks and enhance the stability of credit growth.
At the same time, we will continue to implement the existing structural tools, and further implement the renewal and extension of expired tools. Guide the financing cost of the real economy to decrease steadily, and promote banks to actively adjust the interest rate of existing housing loans. Make good use of various regulatory reserve tools to regulate supply and demand in the foreign exchange market, and resolutely guard against the risk of exchange rate overshoot. Guide financial institutions to actively and steadily support local debt risk resolution, and establish a normalized financial debt monitoring mechanism for financing platforms.
"Affected by the relatively large number of instruments maturing in the short-term open market, the closing of the month, the end of the month and the approaching of the holiday, and the accelerated pace of special bond issuance, the liquidity of the interbank market has converged significantly recently." Zhou Maohua believes that since the beginning of this year, the People's Bank of China has made efforts to increase the counter-cyclical adjustment of policies, and the policy effects have gradually appeared, and it is expected that the People's Bank of China will rely more on structural tools, give full play to its directional and direct characteristics, increase support for weak links in the real economy and key emerging areas, and improve policy quality and efficiency.
Looking forward to the follow-up monetary policy, Pan Helin mentioned, "I think the People's Bank of China will continue to maintain liquidity easing, but the current monetary policy space is limited, and the main contradiction is not the lack of bank liquidity, but the lack of bank liquidity in consumer consumption and investment confidence." It is expected that investment and consumer confidence will be strengthened in the future."
Yang Haiping believes that after the National Day holiday, the main influencing factors in terms of funds include the return of funds caused by the expiration of MLFs, and the investment of funds invested by local government bond funds one after another, and the biggest uncertainty comes from the financing of local government bonds. In his view, from the fourth quarter, the possibility of reducing the RRR again in order to cooperate with the financing of local government bonds cannot be ruled out.
Beijing Business Daily reporter Liu Sihong