The central bank’s reverse repurchase operations are frequently carried out with relatively low transaction volumes; industry experts say this does not mean monetary policy is being tightened, and liquidity in the current market still remains abundant.

Why do industry experts emphasize that liquidity remains ample despite current market conditions?

According to Caixin, since April, the central bank’s 7-day reverse repurchase operations have been conducted with minimal scale for several days, with amounts of 500 million yuan, 500 million yuan, 1 billion yuan, and 500 million yuan, respectively, with the 500 million yuan operation being the lowest since 2015.

Meanwhile, since March, the amount of outright reverse repurchase operations has also been repeatedly scaled down and continued. On April 7, the central bank conducted 800 billion yuan of 3-month outright reverse repurchase operations. Since 1.1 trillion yuan matured that month, this operation was a scaled-down continuation, with a net withdrawal of 300 billion yuan. These adjustments to short-term and medium-term liquidity management tools have sparked market attention on the central bank’s stance on liquidity regulation.

According to Shanghai Securities News, industry experts believe this is merely a flexible adjustment by the central bank in response to changes in market supply and demand, not a tightening of monetary policy. Currently, market liquidity remains abundant.

Wang Qing, Chief Macro Analyst at Orient Securities, stated that the continued scaling down of the 3-month outright reverse repurchase operations aligns with recent continuous large-scale operations in the open market, mainly due to the relatively loose liquidity since early April. Recently, the average overnight pledge repo rate for deposit-taking financial institutions has remained below 1.3%. On April 2, the yield on 1-year AAA-rated bank commercial paper fell below 1.5%, hitting a record low. This was driven by the central bank’s large-scale net injections of 1.9 trillion yuan through medium-term lending facilities and outright reverse repurchase operations from January to February, as well as lower net financing of government bonds in March.

Xiao Jinchuan, Co-Chief Macro Analyst at Huaxi Securities, pointed out that the recent central bank operation announcement explicitly mentioned “fully meeting primary dealer demand,” indicating that the reduction in reverse repurchase scale is a routine operation aligned with market liquidity needs. Despite continued net withdrawal after the season change, liquidity remains generally loose.

Disclaimer: The market carries risks; investment should be cautious. This article is generated by AI based on third-party data for reference only and does not constitute personal investment advice.