PBoC Injects Long-Term Liquidity for Sixth Consecutive Month to Boost Economic Growth Amidst Faltering Recovery Momentum

Published on

numen cyber focuses on Web3 Security and Threat Detection and Response. They provide industry-leading Web3 Security Solutions, which
can completely cover cybersecurity requirements of all kinds.

BEIJING — China’s central bank has taken measures to inject additional long-term liquidity into the country’s financial system for the sixth consecutive month, aiming to strengthen economic growth in the face of a faltering recovery.

The People’s Bank of China has provided 125 billion yuan ($18 billion) through medium-term lending facilities, surpassing the 25 billion yuan amount that was set to mature in May.

This move comes as no surprise, as eight out of ten analysts surveyed by Bloomberg had anticipated a rollover without any changes. The interest rate on the one-year policy loans has remained steady at 2.75% for the ninth month in a row.

In April, China experienced weaker-than-expected inflation figures, along with a significant decline in imports and credit.

These factors have raised expectations that the People’s Bank of China may have the flexibility to intensify its monetary support.

Traders have eagerly awaited further indications of policy backing, and as a result, bond prices have surged in anticipation of increased assistance from the central bank.

“The net liquidity injection is small if not negligible, but it sends a signal to the market that the PBOC stays supportive via quantitative tools,”said Frances Cheung, rates strategist at Oversea-Chinese Banking Corp. in Singapore.

The decline in interbank rates, which serve as a gauge of borrowing costs for commercial lenders, has significantly diminished the appeal of the relatively expensive Medium-Term Lending Facility (MLF) funds.

This development has led to a surge in demand for safer assets, causing yields on 10-year government bonds to drop by two basis points on Thursday, reaching their lowest level since November.

Concurrently, concerns surrounding economic growth and the implementation of deposit rate reductions by certain lenders have contributed to this shift in investment preferences.

Following the operation, the yield on the 10-year sovereign note experienced a marginal increase of 1 basis point, reaching 2.71%.

Meanwhile, offshore yuan saw a slight uptick of 0.1%, trading at 6.9677 per dollar. The benchmark CSI 300 index initially faced a 0.3% decline at the market opening but managed to recover slightly, recording a 0.1% rebound.

Image

Latest articles

Beijing Unveils ‘Beijing Internet 3.0 Innovation and Development White Paper (2023)’ to Foster Industry Consensus, Propel Advancement

In a significant move, the Beijing Municipal Science and Technology Commission, in collaboration with the Zhongguancun Science and Technology Park Management Committee, recently presented the "Beijing Internet 3.0 Innovation and Development White Paper (2023)" during the Zhongguancun Forum parallel session named "Internet 3.0: Future Internet Industry Development."

US Treasury’s Cash Balance Hits Lowest Level Since 2017 as Debt Negotiations Intensify

The financial situation of the US Treasury is reaching a critical point, as cash...

Commingle or Not: The Unjustified Case Against Binance

As cryptocurrency continues to move toward mainstream acceptance, regulatory bodies across the globe are...

U.S. Dollar Faces Impending Demise, Warns Investment Guru Jim Rogers

Renowned investor Jim Rogers, co-founder of the Quantum Fund alongside billionaire George Soros, has sounded the alarm on the future of the U.S. dollar, predicting its inevitable downfall as more nations actively seek alternatives.

More like this

Beijing Unveils ‘Beijing Internet 3.0 Innovation and Development White Paper (2023)’ to Foster Industry Consensus, Propel Advancement

In a significant move, the Beijing Municipal Science and Technology Commission, in collaboration with the Zhongguancun Science and Technology Park Management Committee, recently presented the "Beijing Internet 3.0 Innovation and Development White Paper (2023)" during the Zhongguancun Forum parallel session named "Internet 3.0: Future Internet Industry Development."

Hong Kong to Allow Retail Investors in Crypto Trading as Regulators, Digital-Asset Firms Clash in Asia

Hong Kong is on the verge of announcing new regulations that will permit retail investors to trade cryptocurrencies, as it strives to establish itself as a leading financial center in the digital asset space.

Bearish Sentiment in Oil and Fuel Derivatives Reaches Decade-High

Money managers trading derivatives tied to oil and fuel prices are exhibiting a remarkably pessimistic outlook, reminiscent of the bearish sentiment last seen over a decade ago.