(MENAFN) In a significant move to ensure ample liquidity within its banking system, the People’s bank of China (PBOC) injected 676 billion yuan (USD94.77 billion) through its 7-day reverse repo mechanism at an interest rate of 1.8 percent yesterday, followed by an additional 270 billion yuan through the same mechanism today. These measures are part of the central bank’s strategy to maintain adequate and abundant liquidity in the banking sector. The PBOC has been employing the medium-term lending facility since 2014, allowing commercial and development banks to borrow from the central bank using securities as collateral to sustain liquidity levels.
In the foreign exchange market, the Chinese yuan demonstrated a notable appreciation against the dollar in today’s trading session. The People’s Bank of China’s indicative rate appreciated to 7.1318 yuan per dollar, marking a 10-pip increase from the previous day’s level of 7.1328 yuan. According to Chinese regulations, the yuan is permitted to fluctuate by up to 2 percent from the central bank’s reference rate each trading day in the spot forex market. The indicative rate of the yuan against the dollar is derived from the purchase prices offered by major financial institutions prior to the commencement of daily interbank market transactions. This mechanism ensures that the yuan’s value is closely aligned with the market dynamics and the central bank’s policy objectives.
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