Chinas’s Central Bank to Inject $174 billion Liqudity After Markets’ Plunge Following Coronavirus Outbreak

The People’s Bank of China announced it will be injecting liquidity worth $174 billion (1.2 trillion Yuan) into its markets when they open on Monday through reverse repo operations.

Since January 23, China’s currency, bond and stock markets have remained closed following an extension of Lunar New Year celebrations by the Chinese government. The markets were due to re-open last week however following the outbreak of deadly coronavirus in China this didn’t happen.

Following this injection, total liquidity in Chinese banking industry will be $130.5 billion (900 billion Yuan) higher than it was a similar time last year.

During the announcement made on Sunday, the Chinese government vowed to use various monetary tools to ensure liquidity remains stable and at reasonable levels. In addition the government promised to provide much needed support to companies affected by the virus.

So far the coronavirus has claimed over 300 lives in China.

China Securities Regulatory Commission (CSRC) warned investors to brace for volatile sessions in Chinese markets adding the impact of the virus will only affect the markets in the short term.

Companies affected with the virus outbreak which had expiring stock pledge agreements will be able to apply for extensions with securities firms, additionally, they can also persuade corporate bond investors to extend the dates debts are supposed to mature, said CSRC.

“We believe that the successive introduction and implementation of policy measures will play a better role in improving market expectations and preventing irrational behavior,” added CSRC.