China Drains Cash Via Key Funding Tool for First Time Since 2022

(Bloomberg) — China drained cash from the banking system with a medium-term liquidity tool for the first time since November 2022, extending its cautious approach of using monetary policy to boost growth and showing its willingness to support the yuan.

The People’s Bank of China (PBOC) withdrew 94 billion yuan ($13 billion) cash from the banking system on a net basis to avoid excessive liquidity, while it kept the rate on its one-year policy loans steady at 2.5% on Friday. Earlier today, Beijing set its daily reference rate for the yuan with the largest strong bias since November to the estimate in a Bloomberg survey.