China’s central bank injected 393 billion yuan via medium-term lending facility, rates unchanged

FILE PHOTO: A staff member walks in front of the headquarters of the People's Bank of China (PBOC), the central bank, in Beijing, June 25, 2013. REUTERS/Jason Lee/File Photo

Vastavam web: China’s central bank said on Tuesday it had injected 393 billion yuan ($62.13 billion) into the financial system via one-year medium-term lending facility (MLF) loans.Authorities are keen to keep ample liquidity in the financial system and avoid the risk of a spike in lending rates as demand for cash surges ahead of the long Lunar New Year holidays, when Chinese splurge on gifts and celebrations.

The central bank said it had made the latest MLF injection to step up “fine-tuning” as liquidity on the first trading day after the holiday would be affected by several factors, including tax payments, maturing MLF loans, and maturing of some contingent reserve allowance (CRA) and reserve payments at financial institutions.

The PBOC said in December it would allow some commercial banks to temporarily keep less required reserves to help them cope with the heavy demand for cash ahead of the festivities. And the CRA would release temporary liquidity worth almost 2 trillion yuan.