The People's Bank of China, China's central bank, conducted 35 billion yuan worth of 7-day reverse repos at a yield of 2.50 percent in Thursday's open market operation. Statistics show 85 billion yuan of reverse repos were due this week, and the central bank had offered 50 billion yuan of reverse repos on Tuesday.
As a result, the central bank neither drained nor injected funds into the financial system through open market operations this week. Traders noted that the central bank's continuous reverse repo offerings showed its intention to keep liquidity environment stable and stabilize market sentiment.
Standard Chartered Bank predicted that the central bank may cut the reserve requirement ratio (RRR), the amount of cash that banks must hold as reserves, by 1 percentage point before the end of this year.
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