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China Injects Most Cash in Two Months, Triggering Gains in Bonds

(Dec 28): 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. Government bonds gained, Bloomberg reported.
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 yield on 10-year government bonds fell to 2.795%, the lowest level since June 2020.
The PBOC’s operation 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. The supply of cash tends to tighten toward the end of the year, as banks hoard cash to prepare for regulatory checks, Bloomberg reported.
Dec 29, 2021 13:34
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