The People’s Bank of China will today drain 75bn yuan from the money market through 28-day bond repurchase agreements (repos). Only 40bn yuan in central bank repos mature this week, so the move will tighten up the Chinese economy.
While excess liquidity is mopped up, however, the central bank continues to issue bills. In today’s regular market operation, 12bn yuan one-year bills were bought at a yield of 1.7605 per cent. The yield has remained at this level since August of last year.