Home » Increase in capital investment to release warmth, the central bank expected to “replenish water” in August | Central Bank | Liquidity | Reverse Repurchase_Sina Technology

Increase in capital investment to release warmth, the central bank expected to “replenish water” in August | Central Bank | Liquidity | Reverse Repurchase_Sina Technology

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Original title: The central bank expects to “replenish water” in August

On July 29th and 30th, the central bank carried out 30 billion 7-day reverse repurchase operations. Towards the end of the month, the open market reverse repurchase operations increased volume in a timely manner, indicating the central bank’s attitude to maintain stable liquidity at the end of the month. Market participants predict that the liquidity supply gap in August will reach trillions, and the influence of factors such as the acceleration of local debt issuance may increase. After the RRR cut in July, the central bank will still need to “replenish water” through open market operations and other methods.

● Our reporter Zhao Bai Zhinan and Peng Yang

At the end of the month, the central bank’s reverse repurchase transaction volume increased

On July 29, the central bank launched a 30 billion 7-day reverse repurchase operation by way of interest rate bidding, and the winning interest rate was maintained at 2.20%. This is the first time since July that the central bank has increased the amount of reverse repurchase operations. On July 30, the central bank once again launched a 7-day reverse repurchase operation of 30 billion yuan, demonstrating its attitude of stabilizing liquidity at the end of the month.

From June 24 to June 30, in order to maintain the stability of liquidity and cross the half-year barrier, the central bank conducted a reverse repurchase operation of 30 billion yuan for 5 consecutive working days. From July 1st to July 28th, the central bank maintained the “convention” of 10 billion yuan of reverse repurchase every working day. On July 15, the central bank launched a 100 billion yuan MLF operation and a 10 billion yuan reverse repurchase operation while the full RRR cut was implemented to release 1 trillion yuan of long-term funds.

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Zhang Xu, chief analyst of fixed income at Everbright Securities, said that the increase in open market operations shows that the central bank has fully considered the demand for funds from financial institutions, maintained reasonable and sufficient liquidity, and stabilized market expectations. At the same time, the operating interest rate has not been reduced, which shows that the orientation of prudent monetary policy has not changed. In fact, it is a routine operation to increase investment at a time when funds are tight at the end of the month. It is expected that the central bank will continue to guide market interest rates such as the 7-day repo rate DR007 to fluctuate around open market operating interest rates.

Large liquidity gap in August

Looking ahead to August funding, experts believe that the July RRR cut is still insufficient to fill the August liquidity gap. Under the influence of factors such as the increase in the supply of government bonds, the central bank still needs to “replenish water”.

Sun Binbin, chief analyst of fixed income at Tianfeng Securities, said that according to current data, there will be 700 billion yuan of MLF due in August, and about 850 billion yuan of government bond net financing, although there is some liquidity released by the July RRR cut. Support, but the central bank still needs to carry out certain operations to maintain reasonable and sufficient liquidity.

China Everbright Securities Banking Chief Analyst Wang Yifeng predicts that the base currency gap will be between 550 billion yuan and 600 billion yuan in August, and the MLF will expire at 700 billion yuan that month, and the total gap will reach 1.25 trillion yuan to 1.3 trillion yuan.

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“The net financing of government bonds in August may be close to 1 trillion yuan, which is a relatively rare order of magnitude in the last 10 years.” The chief analyst of fixed income at CITIC Securities stated clearly, considering that the net financing of government bonds in August was relatively large. Large, fiscal deposits may increase by about 200 billion yuan, which will have a certain impact on funding.

“Replenishment” program or choose one of three

Wang Yifeng believes that in view of the August base money supply gap, there are roughly three possibilities for the central bank to “replenish water”. The first is to reduce the volume and continue to do MLF, and to carry out the reverse repurchase operation. The continued MLF scale may be maintained at 500 billion to 700 billion yuan. The second is to increase the amount of re-lending and rediscount, and reduce the amount to carry out MLF operations. The third is to reduce the RRR again. The most optimistic scenario is to reduce the RRR again by 0.5% in August, releasing about 1 trillion yuan in funds, and at the same time reducing the amount to carry out or not to carry out MLF operations.

However, some market participants believe that in the absence of significant changes in economic fundamentals, the central bank is unlikely to cut its RRR for two consecutive months.

Sun Binbin said that whether the monetary environment is more accommodative depends on the future fundamentals. At present, the foundation for the current economic recovery is not stable, and there is still a gap between the performance in the fourth quarter of last year. At the same time, domestic and foreign epidemics have repeated, and the uncertainty of economic recovery still exists. After the RRR cut in July, neither the MLF nor LPR interest rates have been adjusted. It may be that the fundamentals are still good and there is no need to reduce the corresponding interest rates for hedging. However, even if there is no RRR cut in the future, the possibility of LPR reduction still exists.

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