(MENAFN) In a continuation of its efforts to maintain liquidity in the banking system, the People's Bank of China, the country's central bank, injected 100 billion yuan (USD14.05 billion) through 7-day reverse repurchase operations at an interest rate of 1.8 percent. This move comes on the heels of a substantial injection of 760 billion yuan through the same mechanism the previous day. The central bank's objective, as stated by the New China News Agency (Xinhua), is to uphold "acceptable and abundant cash liquidity in the banking system."
Reverse repurchase operations, commonly known as "reverse repo," involve the central bank buying securities from commercial banks through a bidding process, with an agreement to sell them back at a later date. This strategic financial maneuver aims to regulate the flow of money in the banking system and address liquidity concerns.
Simultaneously, in the foreign exchange market, the Chinese yuan exhibited a decline against the U.S. dollar in today's trading, recording a decrease of 6 Chinese pips to 7.1174 yuan. This is compared to the exchange rate of 7.1168 yuan per dollar observed in the previous trading session.
Chinese regulatory provisions permit the yuan to fluctuate within a 2 percent range above or below the central bank's guidance rate each trading day in the spot foreign exchange market. Notably, the indicative price of the yuan against the dollar is determined based on purchase prices provided by major financial institutions before the commencement of daily interbank market transactions. These currency market dynamics highlight China's ongoing efforts to manage its monetary policy and maintain stability in the financial system amidst evolving economic conditions.
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