PBOC pumps cash amid year-end liquidity demand

The People’s Bank of China’s (PBOC) liquidity injection jumped the most in two months, in the face of the year-end demand for cash from the banking system, per Bloomberg.

Key takeaways

“The PBOC added 200 billion yuan ($31 billion) of cash into the financial system through seven-day reverse repurchase agreements, more than offsetting the 10 billion yuan coming due.” 

“The move came after an indicator for short-term borrowing costs soared the most in a year on Monday, a sign of liquidity shortages in the interbank market.”

Market reaction

USD/CNY is trading modestly flat around 6.3720, as of writing.