The US$68 billion reason why China may start injecting cash again

BEIJING (July 11): An onslaught of maturing funds may see China’s central bank reaching for the fire hose.

The People’s Bank of China hasn’t pumped cash into the financial system via open-market operations for 15 days, the longest drought since March. A combination of curbs on loan issuance, a stronger yuan and seasonality factors meant they didn’t have to, with a rush of liquidity spurring policy makers to do the opposite, and drain funds.

But that situation could reverse as soon as this week, when a total of 459.5 billion yuan ($93.6 billion) of funds issued via reverse-repurchase agreements and the PBOC’s medium-term lending facility comes due -- the most since the week ending June 5. Further mopping up funds, government issuers and policy banks will sell at least 483 billion yuan of bonds by Friday. And then there’s tax payments, which may see companies hoard cash into the end of July.

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