The People's Bank of China announced on November 4 that it will carry out an outright reverse repo operation worth 300 billion yuan the following day, according to Xinhua. The central bank said the move is intended to keep liquidity in the banking system at a comfortable level.
The operation will run for three months, or 91 days, with a maturity date of February 4, 2027, Xinhua reports. The date would be pushed back if it falls on a holiday.
According to the report, the central bank will use a fixed-volume, rate-tender format in which bids at multiple price levels can be accepted. The announcement did not specify the interest rate at which the operation would be conducted.
Outright reverse repos differ from conventional reverse repos in that the securities involved change hands outright rather than being pledged, though the source material did not elaborate on this distinction. The PBOC regularly uses such tools to manage short- and medium-term funding conditions in the interbank market.
The announcement gave no further detail on the central bank's broader policy stance or the reasons behind the size and timing of the operation.
What to watch next: the results of the November 5 tender, including the accepted rates, which may offer a signal on how the central bank views current funding conditions.
