The People's Bank (central bank) of China injected additional amounts of cash liquidity into the banking system today, Monday, through reverse repurchase operations and lowering the reserve requirement ratio for commercial banks at the central bank.

According to the China News Agency (Xinhua), the central bank carried out reverse repurchase operations today worth 100 billion yuan (14 billion dollars) for a term of 14 days with an interest rate of 1.95%. At the same time, it announced lowering the reserve requirement ratio by half a percentage point, which allows banks long-term liquidity worth approximately one trillion yuan.

This comes as the People's Bank of China cut interest rates for the rural sector and small enterprises to boost economic recovery and improve confidence in the Chinese economy.

It is worth noting that the reverse repurchase, "reverse repo", is operations in which the central bank buys securities from commercial banks by submitting bids, with an agreement to sell them back to them in the future.

In the foreign exchange market, the Chinese yuan price fell against the dollar in today's dealings by 64 Chinese pips to 7.1070 yuan against 7.1006 yuan per dollar last Friday at the close of last week's trading.

Chinese regulations allow the yuan to rise or fall by 2% from the central bank's reference price on each trading day in the spot foreign exchange market.

It is worth noting that the reference price of the yuan against the dollar is determined based on the purchase prices offered by major financial institutions before the start of the interbank market trading daily.