China Injects Fresh Liquidity Into Commercial Banks

The move is aimed at ensuring the stability of the monetary market ahead of the holidays.

The seven-day repurchase rate, a key gauge of liquidity among banks, rose to nearly 6.5% on Monday, up from 4% earlier this month.

The People's Bank of China (PBOC) said it had injected the funds via short-term liquidity operations on Monday.

The Central Bank has said it will inject further liquidity into the financial system via short-term loans to banks, known as reverse repurchase agreements, on Tuesday.

The move, coupled with the injection it carried out on Monday, saw the interbank lending rate come down.

The seven-day repurchase rate dropped to 5.25% on Tuesday.

"These are significant steps by the PBOC," said Zhang Zhiwei, an economist with Nomura, in Hong Kong.

"The measures should help to reduce the liquidity risk in the interbank market and the default risk in the corporate sector over the next several weeks."Zhiwei said.

By Beth Nyaga

Source: BBC News