The People’s Bank of China is boosting the supply of money available to banks to ensure they can meet the surge in demand for cash during the Lunar New Year holidays, reports Bloomberg.
The central bank injected a total of RMB 600 billion ($86.4 billion) via 14-day repurchase agreements late last week, ending a two-month hiatus for such operations. Industrial Securities forecasts the PBOC to add as much as RMB 3.5 trillion of funds via similar tools before the holidays kick off on Sunday.
The injections would address a roughly RMB 3.2 trillion liquidity gap identified by Bloomberg calculations. Withdrawals related to holiday spending, heavy government bond issuance and surging corporate demand for the yuan are all expected to drain funds from the banking system.