China to supply 1.2 tril. yuan to money markets amid virus spread

Andrew Cummings
February 5, 2020

The People's Bank of China (PBOC) made the official announcement on Sunday, further stressing that the system's liquidity would be higher than this time a year ago. As of Monday afternoon, Chinese authorities had reported more than 17,000 infections by the virus and at least 361 deaths.

The effect of the outbreak would be temporary, the Chinese economy would maintain good momentum, and financial regulators have "full confidence" they can keep the economy stable in the long term, the statement said.

The move will kick in on the day that China's financial markets reopen, following an extended Spring Festival break. Authorities have pledged to provide abundant liquidity and urged investors to evaluate the impact of the coronavirus objectively.


China's central bank said it will inject 1.2 trillion yuan (US$173.8 billion) worth of liquidity into the markets via reverse repo operations tomorrow, as the country battles a new coronavirus outbreak.

China has directed most businesses in Hubei province, the epicentre of the new coroavirus outbreak, to remain shut until at least February 14 amid worries a central bank liquidity boost may fall short in real terms.

The US was also one of the countries which have been isolating citizens who travelled to the Chinese city of Wuhan which has also been identified as the epicentre of the outbreak.


As the deadly disease, coronavirus is spreading all over the world from China, World Bank President, David Malpass has disclosed that the multilateral lender will slow down its global growth forecast.

The previously unknown virus has so far infected over 14,000 people worldwide and killed 305 - nearly entirely in China. The bank did not give further details on the agreements or the interest rates charged on the transactions. Beijing, the country's administrative center, stopped short of declaring this week a holiday.

The outbreak meanwhile is leaving China increasingly isolated. In Hong Kong, the government said it was studying further controls on travel from the mainland in response to a planned strike by medical workers aimed at pressuring the government to shut the border with China.


The measures announced over the weekend were mostly targeted at the immediate problems facing the economy and markets and aren't a large increase in stimulus, although that could change if the situation warrants.

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