BEIJING, Nov. 18 (Xinhua) -- China's central bank Monday launched a seven-day reverse repo and cut its rate by 5 basis points to 2.5 percent, in order to cut fund-raising costs for enterprises.
This is the first such cut in the reverse repo rate in more than four years, according to the China Securities Journal.
The People's Bank of China injected 180 billion yuan (about 25.71 billion U.S. dollars) into the market through seven-day reverse repos. Before this, the central bank reverse repo operation had been suspended for 15 working days.
A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future. In this way, commercial banks can raise short-term capital. It is the equivalent of a short-term loan with the securities serving as collateral.
The stock market and bond market rallied in response.
A single purchase
