The People’s Bank of China or the PBOC continues to skip the reverse repos this Tuesday. Sources say that the decision aims to maintain reasonably sufficient liquidity in the country’s banking system.
In an official statement, the central bank of China said that the increase in fiscal expenditures could affect the maturing reverse repos. The PBOC also skipped the reverse repos on Monday, saying that there is abundant liquidity.
A reverse repo is a way for central banks to purchase securities from commercial banks by bidding. The two banks then will have an agreement to sell them back in the future.
This year, Beijing and the central bank of China vowed to hold on to its well-known and highly controversial monetary policy. The bank keeps on its “not too loose but not too tight” style.
Meanwhile, the PBOC also tries to maintain its market liquidity at a reasonably ample level this year.
Currency experts and analysts expect the Chinese government to focus more on its monetary policy accommodation in the future. Beijing is currently looking for ways to stabilize the yuan and support curb amidst the slowing global and local economies.
The news from the People’s Bank of China did very little to push the Chinese yuan in today’s trading. The yuan did not climb high, but it held firm to its gains as it steadied against other currencies.
The USD CNY exchange rate went down by 0.06% or 0.0044 points this Tuesday’s trading. The pair slipped down to ¥7.0626 from its previous close of ¥7.0670.
Meanwhile, the CNY JPY trading pair inched its way up by 0.07% or 0.0101 points in sessions. The pair currently trades for ¥15.4221 and has fluctuated from ¥15.4085 to ¥15.4515 this Tuesday.
And the CNY CNH or Chinese yuan/Chinese yuan offshore pair traded flat as it barely slips 0.01% or 0.0001 points in sessions.
Yuan traders still expect the bank of China to take measures to stabilize the currency. The latter half of October was a subtle win for the yuan as it gradually gains against the USD.