China's central bank continues net cash injection

The People's Bank of China (PBOC) is seen in this file photo taken in Beijing. [Photo/Xinhua]

BEIJING - China's central bank on Wednesday continued to pump money into the interbank market via reverse repos to ensure stable liquidity.

The People's Bank of China (PBOC) conducted 160 billion yuan ($24 billion) of seven-day reverse repos with an interest rate of 2.45 percent, and 140 billion yuan of 14-day reverse repos with an interest rate of 2.6 percent.

Offset by 30 billion yuan of maturing operations, the move resulted in a net injection of 270 billion yuan.

The move is largely in response to spiking liquidity demand in October due to seasonal factors such as tax payments.

In Wednesday's interbank market, the overnight Shanghai Interbank Offered Rate, which measures the cost at which banks lend to one another, dropped 0.43 basis point to 2.5960 percent.

The PBOC's open market operations are closely watched by the market, as they have become major tools for the central bank in pursuing its monetary policy.

"On one hand, the PBOC needs enough liquidity to maintain financial stability and support the real economy; on the other, monetary policy cannot be too loose or the deleveraging process will falter," said a report from JZ Securities.

China set the tone of its monetary policy in 2017 as prudent and neutral, keeping an appropriate liquidity level but avoiding excessive injections.