SHANGHAI: China’s central bank has injected 700 billion yuan ($97 billion) into its banking system during May through an outright reverse repurchase tool, the bank said on Friday.
The operations, conducted with tenors of three and six months, were aimed at maintaining “reasonably ample liquidity” in the banking system, the PBOC said in a statement.
With 900 billion yuan in outright repos expiring this month, the data suggests a net withdrawal of 200 billion yuan from the system via the tool.
In a separate statement, the PBOC said on Friday that it had refrained from buying or selling Chinese government bonds in open market operations for the fifth consecutive month in May.
Market participants are closely watching for signals on when the PBOC will resume purchases of its own government bonds.
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“Amid rising risks of U.S.-China decoupling, there is growing urgency to resume government bond trading to increase the central bank’s holdings of sovereign debt,” analysts at Caitong Securities said in a note on Thursday.
The analysts expect the PBOC to resume bond buying as early as July or August, amid concerns that a potential end to the tariff truce between China and the United States could weigh on economic sentiment.
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