People's Daily Online, Beijing, September 21 (Reporter Luo Zhizhi) According to Wind data, from September 1 to 11, the central bank did not invest in the open market, but from September 12 to 18, the cumulative net investment of the central bank reached 695 billion yuan. Including 265 billion yuan of MLF operation carried out on September 17. Why does the Central Bank increase its investment in the open market? Does this mean the central bank releases water? Experts take you to find out.
Why did the Central Bank increase its efforts in the open market in mid month?
As for the open market operation of the central bank, Guo Yuwei, a senior analyst of Industrial Research Company, made a vivid analogy: to a certain extent, the central bank is like managing a pool of water while pumping water. The pool is called the inter-bank market. When the water level in the inter-bank market is too high, the central bank administrator needs to open the pump to pump water; When the water level is too low, the central bank needs to turn on the tap to inject water.
Guo Yuwei introduced that there are four main "pumping pipelines" in the inter-bank market, namely, tax payment, standard payment, government bond issuance payment and cash leakage. These four pipelines are usually opened at different times. The deadline for tax payment is usually in the middle of the month and will be postponed in case of holidays; The payment reserve is mainly made on the 5th, 15th and 25th of each month, but there may also be situations of refunding reserve and increasing liquidity without decreasing; Although the issuing time of government bonds is not fixed, the total issuing scale has been determined at the beginning of each year when the budget is prepared; Cash leakage mainly refers to the increase of cash held by residents and enterprises, which is more obvious in holidays.
"There are three main channels for water injection: foreign exchange account, fiscal expenditure and central bank operation. Foreign exchange account is related to changes in China's balance of payments; fiscal expenditure is often greater in the late ten days; while central bank operation is to cut the peak and fill the valley, adjust the surplus and deficiency after comprehensively judging the factors that reduce liquidity and increase liquidity." Guo Yuwei pointed out.
Guo Yuwei said frankly that it can be seen that when the liquidity is relatively stable at the beginning of the month, the necessity of central bank investment will decline; When paying taxes in the middle of the month to recover liquidity, the central bank needs to increase the amount of "water supplement" in the open market. When the issuance of local bonds increases, the central bank needs to appropriately supplement water to hedge the impact of local bond issuance and payment; When the funds raised by local bonds are converted into fiscal expenditure, the central bank will reduce the investment accordingly to prevent the "water level" of the inter-bank market from being too high.
In addition, Mingming, the chief fixed income analyst of CITIC Securities, also pointed out that the public has a great demand for cash withdrawal when the Mid Autumn Festival and National Day holidays are coming, and the process of public withdrawal from banks will consume the liquidity within the banking system. At the end of September of the last three years, M0 has increased by about 200 billion yuan month on month, and the central bank will put liquidity to supplement the liquidity gap every holiday.
How to judge whether the central bank is "releasing water"?
The article "EBS Fixed Income Research" pointed out that it is not only open market operation that determines the water level of the interbank market pool. There are several pipes for water inflow and outflow. For example, the use of funds by issuing local bonds, the change of foreign exchange funds, the collection and withdrawal of financial deposits, etc. To see if the central bank is "releasing water", it mainly depends on the DR007 indicator.
DR007 refers to the repo rate between banks. "The interest rate is the price of capital, just like the price of cabbage in the vegetable market. If the cabbage harvests well, the price must be low, which is the relationship between quantity and price of supply and demand. The price of capital is also the same. If the central bank releases water, the DR007 will certainly decline significantly." The publication said.
Wind data shows that on September 14, DR007 was 2.62%. On September 17, after the Central Bank launched MLF operation of 265 billion yuan, DR007 was still 2.62%. On the 18th, DR007 rose instead of falling to 2.71%.
Regarding whether the "water level" of the inter-bank market is appropriate, Guo Yuwei also said that the inter-bank fund interest rate is a very intuitive water level scale. In the middle of September, DR007 remained relatively stable and did not show an obvious downward trend despite the central bank's increased efforts to open the market. In general, DR007 has fluctuated slightly around the central bank of 2.62% since September, reflecting that although the central bank's investment intensity has changed significantly, the "water level" of interbank liquidity is basically stable.
