PBoC Overnight Reverse Repo Hits 1 Trillion Yuan Daily Cap
China's central bank conducted a 1 trillion yuan overnight reverse repo operation, reaching the daily limit and setting a new high. Combined with a 412 billion yuan 7-day operation, total daily reverse repo hit a record 1.412 trillion yuan, signalling the growing importance of the overnight instrume
The People's Bank of China (PBoC) conducted a 1 trillion yuan overnight reverse repurchase agreement (repo) operation in open market operations on 27 October, reaching the daily limit for the instrument and setting a new high since the overnight tenor was introduced. Market sources said the interest rate remained at 1.25 per cent.
In addition, the PBoC carried out a 412 billion yuan seven-day reverse repo operation at an interest rate of 1.4 per cent. The two operations brought the total daily reverse repo volume to 1.412 trillion yuan, a record for single-day reverse repo operations. Net daily injection reached 1.014 trillion yuan, marking the fifth consecutive day of net liquidity injection.
The central bank has conducted overnight reverse repo operations for nine consecutive days since 21 October, with each day's operation reaching a maximum of 1 trillion yuan.
Market participants suggested that the timing of this month's tax payment deadline fell later than usual, allowing the PBoC to increase the frequency of overnight reverse repo operations. This reflects the growing importance of the overnight instrument as a policy rate tool, they added.