The People's Bank of China, China's central bank, conducted 20 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 20 billion yuan of reverse repos on Tuesday. As a result, the central bank, drained a net 45 billion yuan out of the financial system this week.
Morgan Stanley Huxin Funds predicted that the central bank may further cut banks' reserve requirement ratio (RRR) and benchmark interest rates in the third quarter of this year.
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