(Bloomberg) — China boosted its injection of short-term cash into the banking system to the highest in two months, as demand for liquidity climbed before year-end.
The People’s Bank of China 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.
Liquidity conditions in China tend to tighten toward the end of the year, as banks hoard cash to prepare for regulatory checks. The PBOC reduced the reserve-requirement ratio earlier this month in an effort to keep cash supply ample and support the nation’s economic recovery from the pandemic.
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