For the past 2 days the People's Bank of China have been injecting yuan into the money market using 14-day reverse repos (along with the more regular 7-dayers)

(And it looks like the bank will use the 14-day RRs again tomorrow - Friday).

I posted yesterday on why they were doing this (it's the first time since February the bank has used the 14-day RRs)

But, says this article from Bloomberg, maybe the explanation isn't so straightforward:

  • While the monetary authority is trying to tweak how it manages liquidity, it's difficult to understand why the two-week tool was chosen, according to Capital Economics Ltd.

The Bloomberg piece is here for more.

As is often the case in markets it probably raises more questions than it answers, the solution?

  • "Investors are waiting for further signals from the central bank"