Published: Wed, February 05, 2020
Markets | By Otis Pena

Chinese Central Bank to Pump Billions Into Markets Amid Coronavirus Fears

Chinese Central Bank to Pump Billions Into Markets Amid Coronavirus Fears

The People's Bank of China input 380 billion yuan into the market through seven-day reverse repos at an interest rate of 2.4 percent, and conducted 120 billion yuan of 14-day reverse repos at an interest rate of 2.55 percent.

According to Reuters calculations based on official central bank data, 1.05 trillion yuan worth of reverse repos are set to mature on the same day, meaning that 150 billion yuan in net cash will be injected on the day.

The total liquidity in the banking system will be 900 billion yuan higher than the same period in 2019 after the injection.

China's markets open on Monday for the first time after the Lunar New Year holiday was extended due to the virus. Also announcing a range of measures to step up monetary and credit support up to enterprises which are taking initiatives and helping out in its battle against the virus epidemic, including medical enterprises.

China unveiled a raft of measures over the weekend to aid companies hit by the coronavirus outbreak and also shore up financial markets, which are bracing for a sell-off when trading re-starts on Monday.

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The move to inject liquidity into its financial system comes as authorities work to shore up confidence in an already slowing economy.

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Coronavirus

Prior to the outbreak of the disease in China, the World Bank economic outlook had predicted that the world economy would grow to 2.5% in 2020 from 2.4% it was a year ago.

Analysts are warning that economic growth could weaken further if the spread of the epidemic virus goes on for a longer period.

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Foxconn, Toyota, Starbucks, McDonald's and Volkswagen are just a few of the corporate giants to have paused operations or shuttered outlets across China.

The Chinese economy has already slowed due largely to a almost two-year-long tit-for-tat trade war with the United States, making it more hard for the nation's smaller companies to raise capital, analysts say.

The previously unknown virus has so far infected over 14,000 people worldwide and killed 305 - nearly entirely in China.

The US was also one of the countries which have been isolating citizens who travelled to the Chinese city of Wuhan which has also been identified as the epicentre of the outbreak.

Health Center implements screening procedures for coronavirus
The CDC does not recommend the use of facemasks for the general public to prevent the spread of 2019-nCoV. She explained that people are in the middle of the flu season.


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