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China Central Bank Boosts Liquidity
BBC NEWS, BUSINESS
December 20, 2013: China's central bank: the People's Bank of China (PBOC) has injected fresh funds into the markets to help allay concerns of a cash squeeze. The bank said it had done so "recently" but did not give details of the exact date or how much cash it had injected.
However, some reports indicated it had pumped in 200bn yuan ($33bn; £20bn). The move saw a sharp fall in China's interbank lending rate. The seven-day repurchase rate fell to 4.98% on Friday after having risen to 6.6% on Thursday.
The central bank announced its move on its microblog late on Thursday. Liu Li-Gang: a Hong Kong-based economist at ANZ bank said the move indicated that "the PBOC intends to calm down market fears". "The central bank appears to understand that the market might be faced with some unusual conditions. We believe the central bank's intervention is necessary and timely."
The PBOC said it had injected the funds via short-term liquidity operations. These operations are generally conducted by the central bank with individual lenders behind closed doors.
The state-owned Xinhua news agency quoted the bank as saying that it would remain flexible with its policy of conducting such operations.
