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Thursday, February 23, 2017, 13:49

China's central bank drains US$5.82b from market

By Xinhua
China's central bank drains US$5.82b from market
This photo, taken on Nov 7, 2011, shows the headquarters building of the People's Bank of China in Beijing, capital of China. (Liu Jinhai / Xinhua)

BEIJING – China's central bank drained 40 billion yuan (around US$5.82 billion) from the market on Thursday.

This marks the first day that the People's Bank of China (PBOC) drains liquidity from the market after injecting money into the market for five consecutive days.

The move came after the central bank had injected money into the market for five consecutive days

On Thursday, the central bank conducted 20 billion yuan in seven-day reverse repos , 20 billion yuan in 14-day reverse repos and 10 billion yuan in 28-day reverse repos.

A reverse repo is a process by which central banks purchase securities from banks with an agreement to sell them back in the future.

With 90 billion yuan worth of reverse repos maturing on Thursday, the central bank effectively withdrew 40 billion yuan from the market.

The central bank said in a statement on Tuesday that it will extend a favorable policy that allows banks with big lending to small and agricultural firms to enjoy a lower cash reserve ratio.

READ MORE: PBO C withdraws liquidity for 3 weeks

The statement also showed a falling bad loan ratio and better profits for banks last year.

Chinese lenders saw the ratio of their non-performing loans fall to 1.74 percent at the end of 2016, slightly down from 1.76 percent a quarter ago.

Banks reported faster profit growth thanks to a firming economy. Net profits of commercial lenders increased 3.54 percent year on year, up 1.11 percentage points from a year ago.

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