China’s central bank today announced plans to inject 1.2 trillion yuan worth of liquidity ($174 billion in U.S. dollars) into the financial markets via reverse repo operations on Monday, as stock markets prepare to reopen amid an escalating Wuhan coronavirus outbreak.
Stock, currency and bond markets have been shut down in China since January 23, and were due to re-open last Friday.
China's securities market regulator said in a People’s Daily [warning: .cn] interview Sunday that no further delays are planned.
Chinese authorities have pledged to use various monetary policy tools to ensure liquidity remains reasonably ample and to support firms affected by the virus epidemic, which has so far claimed 305 lives, all but one in China.
The People’s Bank of China made the announcement in a statement on Sunday, adding the total liquidity in the banking system will be 900 billion yuan higher than the same period in 2019 after the injection. According to Reuters calculations based on official central bank data, 1.05 trillion yuan worth of reverse repos are set to mature on Monday, meaning that 150 billion yuan in net cash will be injected.
Investors are bracing for a volatile session in Chinese markets when onshore trades resume on Monday after a break for the Lunar New Year which was extended by the government.
China to inject $174 billion of liquidity on Monday as markets reopen [Cheng Leng, Brenda Goh, Reuters.com]