On Aug. 19 the PBOC set 7-day reverse repo injections at zero per primary
dealers’ demand — the seventh consecutive trading day with no 7-day injections
since Aug. 11. The four overnight reverse repo operations previewed on Aug. 12
were all conducted, but daily volumes stayed below the 600 billion yuan cap.
Dongfang Jincheng chief macro analyst Wang Qing said liquidity has been
relatively ample since Aug. 14, leaving daily overnight reverse repo demand
under the cap. From Aug. 14–19, DR001 and DR007 averages ran below the 1.4%
policy rate and declined versus earlier levels, which Wang links to August’s
lighter fiscal-revenue and tax-payment flows and only mild fiscal-driven cash
withdrawals. The PBOC is likely to resume 7-day reverse repos on Aug. 20 to
signal the policy rate and stabilize expectations, and to restart overnight
reverse repos near month-end — a shift the PBOC says will permit more precise
liquidity adjustments and should support DR001 stability.