China injects 90 billion yuan to boost liquidity amid Evergrande problems
Date 18 Sep 2021 time 16:29
Chinese authorities have injected 90 billion yuan into the system to prevent tight liquidity from Evergrande.
Bloomberg news agency reported that the National Bank of China injected 90 billion yuan into the financial system through repo, or short-term loans with 7 and 14 days to prevent tight liquidity from Evergrande’s problems. It has the highest value of the Bank of China since Feb.
The move by the National Bank of China comes after the Evergrande case has led investors to worry about the prospects of the real estate and bond markets. Coinciding with this period is the high demand for cash. As banks are reluctant to issue loans at the end of the quarter, which will be reviewed by the supervisory board.
Liquidity is also expected to decline during China’s long holiday season in early October.
Economists at Societe Generale said that avoiding tight liquidity is a top priority of the People’s Bank of China, and banks have several options to choose from. And there is no concern that the financial market crash caused by the US investment bank Lehman’s debt crisis will hit Evergrande, but there is the possibility of a protracted and severe economic slowdown.
Alvin Tan, head of FX strategy Asia at Royal Bank of Canada, said that Evergrande’s situation and the shock it sent to the real estate market. It will have a more direct impact on China’s economic growth than any Chinese regulatory regulation, so it is not surprising that the People’s Bank of China will move to prevent a financial market collapse.
Concerns about Evergrande’s troubles come at a time when China’s economy is slowing due to travel restrictions to fight Covid-19 and measures to curb property price heat. By Wednesday (Sept. 15), Chinese retail sales of the month. August slowed down more than expected.
Experts are evaluating the worst-case impact of the Evergrande problem, with most waiting to see how long the Communist Party of China will resist intervening. As the pressure for the government to intervene began to increase. As the signs of the financial crisis escalate became clearer.
REUTERS/Kim Kyung-Hoon/File Photo