The PBOC on Aug. 14 conducted a 1 trillion yuan buyback reverse repo via a
fixed-amount, rate-bidding, multi-price tender. An equal 1 trillion yuan of
six-month buyback reverse repos matured the same day, leaving outstanding
buyback reverse repos at 6.3 trillion yuan. Oriental Jincheng chief macro
analyst Wang Qing noted overnight money market rates (DR001) have traded below
policy rates since Aug. 4, which may explain the decision not to expand the
August 6M operation. CITIC Securities’ chief economist Mingming’s team said the
large 6M rollover, combined with follow-up overnight reverse repos to protect
liquidity, signals a prudent, mildly accomodative monetary policy orientation.
