China liquidity squeeze eases on cash injection

Short-term borrowing costs fell Tuesday after China’s central bank injected cash into money markets, The Wall Street Journal reported. Chinese stocks also staged a rebound, as more funds became available for investment and worries about the negative impact of higher funding costs for businesses eased. The People’s Bank of China is offering US$4.8 billion of reverse repurchase agreements, a form of short-term lending to banks, after halting the use of the instrument for nearly three weeks, traders participating in the sale said. Interbank borrowing rates hit a six-month high on Monday, triggering fear among bankers and investors.