(July 14): China’s central bank said it’s boosting longer-term liquidity injections through outright reverse repurchase agreements, a move expected to help companies and individuals handle upcoming tax payments and to sustain demand for debt issuance.

The People’s Bank of China said it will add 1.4 trillion yuan (US$207 billion or RM844.1 billion) via six-month outright reverse repo on Wednesday, according to an official statement. The transaction is the largest on record for this specific tool, according to data compiled by Bloomberg.

The operation is to maintain ample liquidity in the banking system, the PBOC said in a statement. This will bring the net injection to 500 billion yuan, offsetting 900 billion yuan in maturities on Wednesday. It also marks the central bank’s first monthly net injection via this tenor since February, as per Bloomberg calculations.

Together with a 200 billion yuan net injection through three‑month outright reverse repos earlier this month, the PBOC will have supplied a total of 700 billion yuan of liquidity via this tool to the market in July.

The measures underscore Beijing’s push to keep funding conditions stable to support the economy which is expected to have weakened in the second quarter, according to a Bloomberg survey. The added funds are expected to cushion the banking system from any sudden liquidity shocks and maintain the stability of interbank rates.

“The amount is above market expectations,” said Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group. “It suggests that the PBOC not only cares about short-term liquidity disturbances due to upcoming tax payments, but is also eyeing credit expansion as well as market confidence in the second half of the year.”

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