The People’s Bank of China has carried out another major injection of liquidity into the country’s banking system.
Through a 14-day repo transaction at 2.65% per annum, the Chinese Central Bank added 250 billion yuan to the market, or $ 36.4 billion at the current exchange rate.
The measures are aimed at maintaining a reasonable and sufficient level of liquidity in the banking system of China on the eve of holidays on the occasion of the celebration of the New Year according to the lunar calendar.
The Central Bank emphasizes that it will continue to adhere to a proactive fiscal policy and a neutral monetary policy
The Central Bank emphasizes that it will continue to adhere to a proactive fiscal policy and a neutral — neither too tight nor too soft — monetary policy in order to ensure the country’s economic growth and maintain liquidity at a reasonable and sufficient level.
Since the beginning of the year, the total volume of new liquidity from the Chinese Central Bank exceeded one trillion yuan: from January 1, the regulator reduced by 50 bp reserve requirements, freeing banks about 800 billion yuan.
At the same time, on Monday, the NKB raised the renminbi (the official name of the Chinese currency) against the dollar by 214 basis points, to 6.8664 yuan per dollar. According to the statistics of the regulator, this is the maximum value since July 22, 2019.
At the end of 2015, the yuan fell by 6% against the dollar, in 2016 – by another 6.7%, updating several minimum values for eight and a half years. At the end of 2017, the yuan strengthened against the US currency by 6.2%, in 2018 – fell by 5.1%.
In 2019, the national currency of China gradually decreased against the backdrop of a trade war with the United States, and on August 8 it broke the mark of 7 units per dollar, which became the minimum value for 11 years. However, at the end of the year, as the two countries approached the first stage of the trade transaction, the yuan again began to strengthen against the dollar, and by the end of the year its decline amounted to about 1.9%.