PBoC cash injection hits new high

The People’s Bank of China (PBoC) injected US$60 billion (RMB379 billion) into money markets via its usual open-market operations this week, a record high that signals the central bank’s aim to provide liquidity for the government’s infrastructure investment plans, Financial Times reported. The move, coupled with an increase in the official purchasing managers’ index for October, helped drive the Shanghai Composite up nearly 2% Thursday. The seven-day repurchase rate, a gauge of interbank funding availability, has climbed from 2.7% in mid-October to 4.2% earlier this week before the most recent injections helped bring it back to its current 3.4%. The PBoC’s reliance on open-market operations, or short-term instruments for adjusting money supply, has been criticized by some analysts. “We believe the increased interest rate volatility has made this policy tool less effective, defeating the very purpose of its use as a liquidity management tool,” said Liu Ligang, an economist with ANZ.