The Chinese central bank continues to withdraw liquidity through open market operations.
Net Withdrawal for Five Consecutive Days
On Monday, the People's Bank of China conducted a 48.5 billion yuan seven-day reverse repo operation, with the bid rate maintained at 1.40%.
As there were 135 billion yuan of reverse repos maturing on the day, the open market saw a net withdrawal of 86.5 billion yuan, marking the fifth consecutive trading day of liquidity withdrawal.
According to Refinitiv data calculations, the outstanding reverse repo balance has decreased to 191.1 billion yuan.
Maturity Structure for the Coming Week
The distribution of outstanding reverse repos is as follows:
March 10: 34.3 billion yuan
March 11: 40.5 billion yuan
March 12: 23 billion yuan
March 13: 44.8 billion yuan
March 16: 48.5 billion yuan
The central bank continues to use a fixed rate, quantity bidding approach in its operations.
Open Market Operation Mechanism
In July 2024, the Chinese central bank adjusted the seven-day reverse repo to a fixed rate, quantity bidding model to enhance the precision of open market operations.
In May 2025, the central bank lowered the seven-day reverse repo rate from 1.50% to 1.40%, continuing as the anchor for open market operation rates.
Market analysts indicate that continuous net withdrawals typically signify relatively ample liquidity in the banking system, with the central bank maintaining a smooth funding environment through its operations.
