FX.co ★ PBoC Pulls Liquidity, MoF to Renew CNY 750B Special Bonds

On Wednesday, December 11, the People's Bank of China executed a seven-day reverse repo operation amounting to CNY 118.6 billion, maintaining the interest rate at 1.4%. As CNY 180.8 billion worth of reverse repos matured on the same day, this action led to a net liquidity withdrawal of CNY 62.2 billion from the market.

In parallel, the Ministry of Finance declared its plan to roll over CNY 750 billion in special treasury bonds that are set to reach maturity on Friday. To facilitate this, an equivalent issuance will be offered to designated banks within the interbank market. This issuance will comprise CNY 400 billion in 10-year bonds and CNY 350 billion in 15-year bonds. The funds raised will be exclusively used to repay the maturing principal. The Ministry emphasized that this bond rollover is strictly a replacement measure and will not result in an increase in the fiscal deficit.