Beijing faces financial market test

On Tuesday, the PBoC reduced its injection of short-term cash to 10 billion yuan (RM6.6bil) from 100 billion yuan (RM65.9bil) in the previous session. That resulted in a net liquidity drainage of 260 billion yuan (RM171bil), the most since early October.

SHANGHAI: A wall of maturing debt and a surge in seasonal demand for cash will test China’s financial markets this month, putting pressure on the central bank to ensure sufficient liquidity.

Demand for liquidity may total about 4.5 trillion yuan (US$708bil or RM2.97 trillion) in January, 18% more than the amount seen last year, according to calculations by Bloomberg based on official data and analysts’ estimates.