Central bank injects liquidity into market

BEIJING - China's central bank conducted net cash injections into the market Friday, the first time this month, to ease liquidity strain.

The People's Bank of China (PBOC) conducted 80 billion yuan (about $12 billion) of reverse repos Friday, pumping a net 50 billion yuan into the market as 30 billion yuan of reverse repos matured.

Reverse repo is a process by which the central bank purchases securities from commercial banks through bidding with an agreement to sell them back in the future.

Despite the injection, the overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which banks lend to one another, climbed to 2.717 percent Friday from 2.646 percent Thursday.

"The central bank's open market operations are expected to stay neutral during the final quarter to ensure stable liquidity," said Shenwan Hongyuan Securities.

The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in interest rates or reserve requirement ratios.

China set the tone of its 2017 monetary policy as prudent and neutral, keeping appropriate liquidity levels but avoiding excessive liquidity injections.