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Central Bank drains RMB653.89
billions |
China's central bank mopped up a net 653.89 billion yuan
(US$79 billion) from the banking system in the first five months of this
year in open-market operations, approaching the full-2004 level, as it
tries to head off economic
overheating.
The central bank has made open-market operations an
increasingly important tool to absorb yuan liquidity as a result of efforts to
keep the currency stable and curb credit.
The central bank conducts open-market operations with banks, insurers,
brokerages and rural credit
cooperatives on China's national interbank market in Shanghai.
“The interest rates on the central bank bills have been falling
continuously since the start of 2005,” the People’s Bank of China said, a
trend it said reflected ample liquidity on the money markets.
The bank had drained 1.198 trillion yuan from the banking system
through issuing bills and 90 billion yuan by entering repurchase
agreements, the central bank said. Matured repurchase agreements in the
January-to-May period allowed the bank to take 36.9 billion yuan from the
banking system.
The central bank released 671 billion yuan into the banking system
through various channels, including matured bills worth 544.2 billion yuan
and matured reverse repurchase agreements of 90 billion yuan, according to
the central bank. The figures were earlier reported by the Economic Daily.
The central bank has said it spent a staggering 1.61 trillion yuan
buying foreign currency in 2004 to maintain the yuan peg against the U.S.
dollar, a rise of 40 percent over 2003. As a result of the intervention,
the central bank had to drain a net 669 billion yuan from the banking
system via open-market operations in 2004 — more than double that of 2003.
China has managed the yuan in a razor-thin range of 8.276 to 8.28
against the U.S. dollar since 1997. Strong trade surpluses and
a heavy inflow of foreign investment have left the market flush with foreign exchange
in recent years.
(Shenzhen Daily) | 
Updated: 2005-06-22 15:46
