5 billion yuan reverse repurchase hits a 10-year low; liquidity is expected to remain relatively loose in April

People’s Finance News, April 2—Although since March the People’s Bank of China’s open market operations have shown some tightening-off, the funding conditions in the interbank market have not seen any obvious tightening. As major month-end and quarter-end rollover dates approach, money market interest rates overall have stayed at a low level, and liquidity has continued to maintain a stable pattern. On the first trading day of April, market attention was sparked by the central bank’s “low-volume” operation: in an April 1 announcement, the PBOC said it would conduct a 5 billion yuan, 7-day reverse repo operation, with a winning interest rate of 1.4%. With 785 billion yuan in reverse repos maturing that day, the PBOC achieved net drainage of 780 billion yuan. The size of this reverse repo operation was the lowest level since 2015. Analysts believe that against the backdrop of relatively loose funding conditions, this sends a signal that the central bank intends to maintain stability while tightening in a measured way, guiding interest rates to operate within a reasonable range. Overall, liquidity conditions are still expected to remain ample, but there is limited room for interest rates to continue falling sharply. (Shanghai Securities News)