The People of China (PBOC) added 200 billion yuan of cash into the financial system through 7-day reverse repurchase agreements, more than offsetting the 10 billion yuan coming due.
The central bank move comes after short-term borrowing costs soared the most in a year on Monday which shows a sign of liquidity shortage int the interbank market.
“The big amount of injection will help to alleviate liquidity pressure,” said Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group told Bloomberg. “It is necessary to help the financial institutions to move cross the year-end smoothly.”
China tend to face liquidity crunch towards the end of the year as bank hoard cash to prepare for regulatory checks.