SHANGHAI (Reuters) – China’s central bank on Monday cut the borrowing cost of 14-day reverse repo contracts and ramped up liquidity injections to counter rising demand at the end of the quarter.
In a statement, the bank said the People’s Bank of China injected 2 billion yuan ($286.54 million) through a 7-day reverse repo and another 10 billion yuan over the 14-day period.
The People’s Bank of China said the higher daily cash injection, compared to daily supply of 2 billion yuan since July, was in order to “keep the liquidity level stable at the end of the quarter,” according to the statement.
The People’s Bank of China (PBOC) also resumed 14-day operations for the first time since late January, cutting the benchmark liquidity instrument by 10 basis points to 2.15% from 2.25%.
The cut was a move to catch up with the central bank’s decision in August by cutting some key interest rates, including the 7-day reverse repo rate, to revive demand for credit and support the faltering economy.
With reverse repo not due on Monday, the People’s Bank of China injected a net 12 billion yuan via short-term liquidity instruments.
($1 = 6.9799)