PBOC to conduct 500 bln yuan outright reverse repo operation

(ECNS) -- The People's Bank of China (PBOC) announced on Tuesday that it will conduct a 500 billion yuan (about $69.6 billion) outright reverse repo operation on Wednesday.

The operation will have a tenor of three months (92 days). Data shows that 300 billion yuan of three-month outright reverse repos are set to mature in August, meaning the upcoming operation will be a net injection of 200 billion yuan, in line with market expectations.

Analysts believe the continued net injection of three-month outright reverse repos in August will help maintain ample liquidity in the banking system, prevent an excessive rise in market interest rates and stabilize market expectations.

Wang Qing, chief macro analyst at Golden Credit Rating International Co., Ltd., said this will support the smooth issuance of government bonds. 

Wang also said the likelihood of a near-term reserve requirement ratio cut is relatively small, while medium-term liquidity operations are expected to continue with increased volume to support government bond issuance and bank lending.

China's macroeconomic policy will gradually step up countercyclical adjustments in the coming period, he said.

(By Tang Yuxian)