People’s Bank of China injects 165B yuan through reverse repos to steady markets

The People’s Bank of China pumped 165 billion yuan into the financial system through 7-day reverse repurchase agreements, maintaining its fixed rate at 1.40%. The move is the latest in a steady drumbeat of liquidity operations designed to keep China’s interbank market functioning smoothly, not to kick off a new round of monetary easing. How reverse repos work, and why they matter A reverse repo is essentially a short-term collateralized loan. The PBOC buys securities from primary dealers, typically large commercial banks, with an agreement to sell them back in seven days. Cash flows into the banking system, and after a week, it flows back out. The 1.40% rate on these 7-day operations has held steady throughout 2026, functioning as the PBOC’s de facto benchmark policy rate. Unlike the Federal Reserve’s approach of signaling through rate changes, the PBOC prefers to adjust volumes while keeping rates pinned. On some recent trading days, gross reverse repo transactions have reached as high as 7,620 billion yuan. That kind of volume makes the 165 billion yuan net injection look modest by comparison, but the net figure is what actually changes the amount of liquidity available to banks....