PBoC conducts large short-term liquidity injection

PBoC set USD-CNY fixing rate at 6.3915 this morning, compared with yesterday's closing rate at 6.39563. In general, recent CNY fixing rates were quite stable. In the mean-time, the central bank conducted RMB120bn 7-day reverse repos this morning, compared with maturing funds of RMB40bn today. For the whole week, PBoC injected RMB150bn into the inter-bank market, the biggest weekly injection in the past six months. 

PBoC also conducted RMB110bn medium-term liquidity facility (MLF) operations towards 14 financial institutions yesterday, as the onshore market liquidity conditions show tightening bias due to capital outflows, notes Commerzbank. The market views that PBoC prefers short-term liquidity injection operation, as a large and permanent liquidity injection, such as RRR cut, could trigger fast depreciation of CNY.