China to Inject 1 Trillion Yuan Through Outright Reverse Repo Operation

Dragon Media News Desk

The People’s Bank of China has announced that it will conduct a 1-trillion-yuan outright reverse repo operation to maintain ample liquidity in the country’s banking system.

The operation, equivalent to approximately 146.96 billion U.S. dollars, will be carried out on July 6, according to a statement issued by the central bank on Friday.

The transaction will have a maturity of three months, or 91 days, and will expire on October 5.

The central bank said the total amount of the operation will be fixed in advance. Interest rates will be determined through competitive bidding, with successful bids accepted at multiple price levels.

Under an outright reverse repo operation, the central bank purchases securities from financial institutions to inject liquidity into the market for a specified period.

The People’s Bank of China introduced the instrument in October 2024 as part of its efforts to improve medium-term liquidity management in the national banking system.

Such operations are conducted on a monthly basis and have maturities of no more than one year.

The introduction of outright reverse repos has expanded China’s monetary policy toolkit and complemented existing liquidity management measures, including temporary repos, temporary reverse repos and the purchase and sale of government bonds.

The latest operation is expected to help maintain sufficient liquidity in the banking system, support credit provision to the real economy and promote stability in the money market.