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The People’s Bank of China (PBOC) cut the yuan’s fixing against the US dollar by 70 pips to 7.1768 per dollar on Monday, compared to a fixing of 7.1698 in the previous trading day.
The central bank injects 70 billion yuan liquidity to the banking system via 7-day reverse repurchase agreement on the day, while 10 billion yuan reverse repo expires, leaving a net 60 billion yuan injection.
The PBOC said it will conduct a central bank bills swap (CBS) operation on Monday to improve the liquidity of perpetual bonds.
The 5 billion yuan of three-month CBS will be open to primary dealers for bidding at a fixed rate of 0.1%. The swap will be due on Jan 31, 2023.
The CBS scheme allows dealers to swap the perpetual bonds they hold for central bank bills, which will boost market demand for perpetual bonds but have a neutral impact on liquidity in the banking system.