news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Our reporter Tan Zhijuan reports from Beijing

After continuing to operate at a "low volume" since July, the central bank has significantly increased its reverse repurchase operations recently.

On July 17, the central bank issued an announcement stating that in order to maintain a reasonable level of liquidity in the banking system, the People's Bank of China conducted a 7-day reverse repurchase operation of 270 billion yuan through interest rate bidding on the same day, with a winning rate of 1.8%. As 2 billion yuan of 7-day reverse repurchases and 103 billion yuan of MLF matured on the same day, a net injection of 165 billion yuan was achieved on the same day.

The day before, the central bank conducted a 7-day reverse repo operation of 676 billion yuan through interest rate bidding, with the winning rate being 1.80%, the same as before. As 2 billion yuan of 7-day reverse repo matured on that day, a net injection of 674 billion yuan was achieved.

In contrast, the reporter noticed that from July 1 to 12, the central bank's reverse repurchase operations were maintained at a low level of 2 billion yuan for 10 consecutive working days, with an interest rate of 1.8%. Therefore, in contrast, the large-scale reverse repurchase operations on July 16 attracted market attention.

Regarding this phenomenon, Liang Si, a researcher at the China Banking Research Institute, said in an interview with a reporter from China Business News on July 17: "This is a forward-looking operation based on market conditions to ease possible liquidity demand pressure."

Liang Si explained to reporters: "Since entering July, the overall supply and demand of market liquidity has remained reasonably abundant. DR007 has always remained near 1.8%, running smoothly around the 7-day reverse repurchase rate, indicating that the supply and demand of market liquidity is stable and there is no obvious liquidity demand pressure. However, considering that July is a big tax payment month, the impact of tax payment factors on the market will gradually become apparent after entering the middle and late part of the month, and the market liquidity demand will increase. Therefore, proactively and moderately increasing short-term liquidity injection operations to hedge against possible increases in liquidity demand will help stabilize the relationship between market liquidity supply and demand and avoid large fluctuations in market interest rates."

Wang Qing, chief macro analyst at Orient Securities, believes that July is a "big month" for fiscal revenue, and the tax deadline is July 15. The withdrawal of funds during the tax period will cause a temporary tightening of liquidity. The overnight interest rate rose sharply on July 15 and remained at a high level the next day. This is the direct reason why the central bank once again implemented a large-scale reverse repurchase after the previous day.

Wang Qing further said: "The second quarter economic data released on July 15 showed that the macroeconomic policy needs to be moderately strengthened in the direction of stabilizing growth. Restraining the rapid rise in fund interest rates and maintaining a reasonable level of market liquidity will help stabilize market confidence and is an important aspect of monetary policy to support economic recovery."

The funding situation has also tightened marginally in recent days. Relevant data show that on July 16, short-term interest rates rose significantly, with the overnight Shanghai Interbank Offered Rate (Shibor) at 1.8940%, up 11.4 basis points; the 7-day Shibor rose 7.3 basis points to 1.8940%; and the 14-day Shibor rose 10.8 basis points to 1.9480%. According to Wind data, the weighted average interest rates of DR001 and DR007 rose. As of 16:50 on July 16, the weighted average interest rates of DR001 and DR007 were 1.9097% and 1.9011%, respectively.

Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, told reporters: "Under the current economic situation, the central bank injects liquidity into the market through reverse repurchase operations to maintain market stability and promote healthy economic development. This operation method helps to maintain reasonable liquidity in the banking system and provide stronger support for the real economy."

Wang Qing pointed out that the central bank has recently emphasized stabilizing short-term market interest rates by moderately narrowing the width of the interest rate corridor, sending clearer interest rate regulation target signals to the market to enhance market confidence. Regardless of the reasons for the increase in the volatility of fund interest rates, the central bank will more effectively control the fluctuation range of fund interest rates by increasing the scale of reverse repurchase operations and strengthening expectation guidance.

Wang Qing also predicted that if the volatility of money market interest rates continues to increase in the future, it is not ruled out that the central bank will activate the temporary overnight reverse repurchase policy tool that it has just established.

The reporter noticed that the People's Bank of China issued an announcement on July 8, stating that in order to maintain a reasonable level of liquidity in the banking system and improve the precision and effectiveness of open market operations, from now on, the People's Bank of China will conduct temporary positive repurchase or temporary reverse repurchase operations depending on the circumstances.

What factors will affect the funding situation in July?

Liang Si told reporters: "Overall, factors such as tax periods and bond issuance may cause some disturbances to liquidity. It is expected that the intensity of short-term liquidity injection will be moderately increased according to liquidity supply and demand to stabilize market fluctuations and help the market overcome the impact of short-term factors."

Yu Fenghui, an economist and new finance expert, said in an interview with reporters: "It is expected that the funding situation will remain relatively loose in July. The central bank's operational flexibility will ensure that market liquidity is reasonable and moderate to support the development of the real economy."

(Editor: Hao Cheng, Reviewer: Wu Kezhong, Proofreader: Yan Jingning)