PBoC injects CNY 231.5bln via 7-day reverse repos with rate maintained at 1.40%

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PBoC supplied CNY 231.5bln via 7-day reverse repos and kept the rate at 1.40%. This is interpreted as an injection of short-term liquidity to ease temporary funding strains in financial markets rather than a rate cut. Stabilization of short-term rates and improvement in banks' funding costs are positive for financial stocks and short-term bonds, and may ease cash-flow pressures for real estate and domestic-demand related sectors. Conversely, the expansion of monetary supply could put downward pressure on the yuan and have negative effects on the external balance and import prices.

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