PBoC suspends open-market operations to boost liquidity

The People’s Bank of China suspended its open-market operations for a second consecutive week in a bid to ease monetary conditions, The Wall Street Journal reported. The central bank usually conducts its open-market operations on Tuesday and Thursdays, offering investors bills and repurchase agreements to drain liquidity from the financial system. However, traders say that the bank declined to offer any bills or repos on Thursday, marking the second week it has suspended operations. The result is RMB2 billion (US$317.6) of liquidity will be injected into the market from maturing bills and repos that have not been replaced. Moreover, on Friday the PBoC offered 14-day reverse repos to a group of financial institutions. The suspension comes after an announcement by the PBoC that it would reduce the amount banks are required to put away as reserves by 0.5 percentage points, effective Friday.