(Bloomberg) -- China’s central bank added 500 billion yuan ($72 billion) to the financial system, its second-largest cash injection on record, in a move that may help ease liquidity concerns after a surprise takeover of a local lender.
The People’s Bank of China offered one-year medium-term lending facilities at 3.3% and sold 10 billion yuan of seven-day reverse repo at 2.55%. The operations, which more than offset the 463 billion yuan of facilities that mature Thursday, come after the government’s first seizure of a bank in more than two decades last month drove up funding costs for smaller lenders.
Thursday’s cash injection should be enough to calm the market for now, according to Frances Cheung, head of Asia macro strategy at Westpac Banking Corp. "The market is optimistic that the central bank will be supportive, and the PBOC is unlikely to disappoint amid the current risk-off environment.”
China’s policy makers have boosted efforts to ensure sufficient liquidity in the past weeks after Baoshang Bank Co. takeover and ahead of the Group of 20 summit in Japan this month, where President Xi Jinping is expected to meet his U.S. counterpart Donald Trump. The yuan has traded in a tight range since mid-May while the yield on 10-year sovereign bonds fell 11 basis points last month.
Futures on the 10-year notes extended their advance to eight days after the PBOC’s operations. The onshore currency traded 0.08% weaker at 6.9144 per greenback as of 10:38 a.m. in Shanghai.
