China ramps up liquidity support to banking system

SHANGHAI, Oct 16 - China's central bank ramped up liquidity support to the banking system as it rolled over medium-term policy loans on Monday, but kept the interest rate unchanged amid concerns about the risk of more sharp yuan declines.

With 500 billion yuan worth of MLF loans maturing, the PBOC is pumping 289 billion yuan of fresh liquidity into the banking system, the biggest such net injection in nearly three years. This month, a slew of Chinese local governments, including Liaoning and Chongqing, are rushing to issue special refinancing bonds to repay outstanding liabilities, as Beijing steps up efforts to reduce growing debt risks that remain a worry for investors.In addition, tax collections by the government in October will also likely cause liquidity stress, analysts said.

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