PBoC Injects Near-Record Cash as Lunar New Year Looms

2025-01-15 03:21 By Chusnul Chotimah 1 min. read

The People’s Bank of China (PBoC) today injected a net CNY 958.4 billion of cash through seven-day reverse repurchase agreements in its daily open market operations.

This represented the second-largest cash injection ever recorded, according to Bloomberg News.

The operation aimed to offset the impact of the expiration of medium-term lending facilities (MLF), increased cash demand ahead of the Lunar New Year holidays, and peak tax season pressures.

Earlier in the week, a cash shortage drove seven-day interbank funding rates to their highest level in over a year.

The reverse repurchase agreements partially replaced the expiration of approximately CNY 955 billion in medium-term financing.

In recent months, the central bank has shifted its policy approach, reducing reliance on the MLF as its primary tool and increasingly using the seven-day reverse repo rate to guide market borrowing costs.

The seven-day reverse repo rate has remained steady at 1.5% since a 20bps cut in late September.



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