China’s benchmark repo rate fell to a four-year low of nearly 1% on Friday as the central bank continued to inject funds into money markets to ensure ample liquidity ahead of a seasonal surge in cash demand at the end of June, said Reuters.
“The fact is that the central bank has kept pouring liquidity, but the transmission is not functioning well,” said a trader at a medium-sized Chinese bank, adding that the recent generous cash injections by the central bank should not be interpreted as a sign of change in its monetary policy stance.
Late June usually sees strong demand for cash in China as financial institutions have to shore up their balance sheets to meet half-year end regulatory requirements, reported Reuters.
