China central bank injects 202.02 billion yuan liquidity in February

BEIJING (Reuters) - China's central bank injected 202.02 billion yuan ($30.86 billion) in liquidity to financial institutions in February, it said on Tuesday, a day after it injected an estimated $100 billion worth of liquidity into the economy through a reserve requirement ratio (RRR) cut.

The People's Bank of China (PBOC) injected 163 billion yuan to financial institutions in February via its medium-term lending facility (MLF).

Outstanding MLF was 1.33 trillion yuan at end-February compared with 1.28 trillion yuan at end-January, it said.

China's outstanding standing lending facility (SLF) was 1.34 billion yuan at the end of last month, the PBOC said, and the central bank injected a total of 3.42 billion yuan via the SLF in February alone.

Interest rates for overnight, 7-day and 1-month SLF were 2.75 percent, 3.25 percent and 3.60 percent, it added.

Separately, the central bank provided 35.6 billion yuan worth of pledged supplementary loans, or PSL, to lenders in February.

There was 1.26 trillion yuan worth of PSL in the banking system at the end of February, compared with 1.22 trillion yuan at the end of January, the central bank said in a statement on its website.

The PSL program, initiated in 2014, is designed to help the central bank target medium-term lending rates while boosting liquidity to specific sectors by offering low-cost loans to selected banks.

While the RRR cut provides long-term liquidity to the market, liquidity tools like MLF, SLF and PSL only provide short-term money to banks which have to pay interest on the funds, unlike RRR.

Ma Jun, the PBOC's chief economist, said in January that liquidity injections ahead of the Lunar New Year holidays could "imply a substitute for a cut in banks' reserve requirement ratios (RRR)".

China resumed its easing cycle for 2016 on Monday, cutting the amount of cash that banks must hold as reserves by 50 basis points, taking the ratio to 17 percent for the biggest lenders.

($1 = 6.5465 yuan)

($1 = 6.5471 Chinese yuan renminbi)

(Reporting by Beijing Monitoring Desk, Sue-Lin Wong and Kevin Yao; Editing by Nick Macfie)

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