(Source: Info-Prod Research (Middle East))
According to FDI: The People's Bank of China (PBOC), the central
bank, scaled back its efforts to pump liquidity into money market
this week, as funds continued to pour into China betting on the
appreciation of its currency. With the sales of 6 billion yuan (923
million U.S. dollars) of three-month bills to commercial banks on
Thursday, PBOC completed its open market operations this week,
realizing a net injection of 26 billion yuan of liquidity into the
banking system after offsetting bills and repurchase agreements
worth 117 billion yuan that had matured. It was PBOC's third
straight week of net injection, but this week's 26 billion yuan was
sharply down from nearly 300 billion yuan last week due to the
strong demand for cash during the May Day holiday. Despite three
consecutive weeks of net liquidity injections, analysts said the
PBOC's tight monetary policy would not change in the medium term and
the current macro control policy will continue as liquidity remains
ample in the market. "New loans may jump to 750 billion yuan in
April, while the amount of bills and repurchase agreements that
mature in May and June will both exceed 500 billion yuan,
respectively, all these factors continue to weigh on PBOC to keep
its policy tight," said Tang Jianwei, a macroeconomic analyst with
the Bank of Communications. The inflow of funds from overseas has
also increased the market's liquidity, according to different
figures by Chinese government departments. China reported a trade
deficit of 700 million U.S. dollars in the first quarter and
received 30.34 billion U.S. dollars of foreign direct investment
(FDI) in January-March. However, China's foreign exchange reserves,
which are made up by its current account surpluses, FDI and funds
flowing in the country, rose by nearly 200 billion U.S. dollars in
the first quarter.
Originally published by Info-Prod Strategic Business Information.
(c) 2011 Info-Prod Research (Middle East). Provided by ProQuest LLC. All rights Reserved.
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