(Repeats story from Saturday)
BEIJING, April 1 China's central bank injected
618.99 billion yuan ($89.93 billion) into the financial system
via short- and medium-term liquidity tools in March, up nearly
50 percent from the previous month, even as financial markets
feared a cash crunch.
The sharp increase followed a 35 percent drop in injections
in February, which in turn fueled worries about tighter
liquidity in March, sending some short-term money market rates
higher and knocking China's stock markets in recent weeks.
The People's Bank of China (PBOC) skipped open market
operations for seven straight sessions through Saturday,
repeatedly saying that liquidity levels in the banking system
were "relatively high", despite typically stronger demand for
funds at the end of the quarter.
Adding to tighter conditions, some banks were believed to be
hoarding cash and curbing lending to each other ahead of a
rigorous quarterly inspection of their books by the PBOC.
In recent months, the PBOC has adopted a modest tightening
bias in a bid to cool explosive growth in debt and wring excess
leverage out of the financial sector, though it is treading
cautiously to avoid hurting economic growth.
Its modest short-term interest rate increases this year have
often been accompanied by various forms of liquidity injections
to keep financial markets from reacting too strongly.
On March 16, the PBOC raised interest rates on its reverse
repurchase agreements, standing lending facility (SLF) and
medium-term lending facility (MLF) loans, following a rise in
rates on the reverse repos and SLF in early February.
The PBOC said on Saturday that outstanding MLF loans
totalled 4.064 trillion yuan at end-March, compared with 3.761
trillion yuan at end-February, implying a net injection of 303
Outstanding SLF loans were at 70 billion yuan at end-March,
compared with 14.92 billion yuan the previous month, implying a
net injection of 55.08 billion yuan.
Total March SLF injections were 121.99 billion yuan, with
around two-thirds of that in loans for a period of seven days or
less, suggesting there was strong demand from banks for
The PBOC uses the SLF and the medium-term lending facility
as tools for managing liquidity in the banking system.
China's pledged supplementary lending (PSL) facility stood
at 2.216 trillion yuan at end-March, up 5.2 percent from end-
February, the central bank said.
China's banks made 1.17 trillion yuan in new local-currency
loans in February, falling sharply from near-record levels in
the previous month but more than analysts had expected,
highlighting the difficulties authorities are facing as they
struggle to get rising debt under control.
Even as officials warned about the dangers from a rapid
build-up in debt, China's banks extended a record 12.65 trillion
yuan of new loans in 2016.
The credit spree helped the economy to expand 6.7 percent,
roughly in the middle of the government's target range. Beijing
has set a slightly more moderate growth target of around 6.5
percent this year.
($1 = 6.8832 Chinese yuan)
(Reporting by Cheng Fang and David Stanway; Editing by Kim