On April 7th, an 800 billion yuan outright reverse repurchase operation will be conducted, corresponding to a net withdrawal of 300 billion yuan.

The Daily News reporter | Zhang Shulin    The Daily News editor | Liao Dan

On April 3, the PBOC issued an announcement. To maintain ample liquidity in the banking system, on April 7, 2026, the People’s Bank of China will carry out an 800 billion yuan (RMB) buyout-style reverse repo operation through a fixed-amount, interest-rate bidding, multi-price bidding, with a term of 3 months (89 days). The maturity date will be July 5, 2026 (if it falls on a holiday, it will be extended).

On April 8, 1.1 trillion yuan in 3-month buyout-style reverse repo will mature. At that time, the net liquidity drain associated with that term of buyout-style reverse repo will be 300 billion yuan.

Reporters noted that since entering April, open market operations have continued to be in a net liquidity drain position, indicating that liquidity in the money market is relatively abundant.

Wang Qing, chief macro analyst at Orient Securities, said that the continuous downsizing and rollover of 3-month buyout-style reverse repo is consistent with the recent consecutive “record-low” open market operations. The main reason is that since early April, market liquidity has been somewhat loose.

Mingming Team, chief economist at Citic Securities, analyzed that, on the one hand, as the cross-month period ends and combined with the end of banks’ quarterly liquidity performance assessments, liabilities are relatively well supplied; on the other hand, April is often a small month for credit, while the full-year issuance plan for special treasury bonds has not yet been published, so the “asset shortage” pattern in the bond market continues.

Continuous two-month downsizing and rollover of 3-month buyout-style reverse repo

On April 3, the PBOC announced that it will conduct an 800 billion yuan 3-month buyout-style reverse repo operation on April 7. Wang Qing pointed out that, according to data, in April 1100 billion yuan in 3-month buyout-style reverse repo will mature. As a result, when the PBOC conducts an 800 billion yuan 3-month buyout-style reverse repo operation on April 7, it means that the volume of 3-month buyout-style reverse repo for the month will be rolled over at a reduced scale, with a reduced scale of 300 billion yuan. This is the PBOC’s second consecutive month of downsizing and rollover of 3-month buyout-style reverse repo. The reduced scale is 100 billion yuan higher than the previous month, which meets expectations.

April’s monetary provision and drainage

Wang Qing judged that the continuous downsizing and rollover of 3-month buyout-style reverse repo, consistent with the recent consecutive “record-low” open market operations, is mainly due to factors such as the PBOC’s large-scale net injection of 1.9 trillion yuan of medium-term liquidity through MLF and buyout-style reverse repo combined in January to February, as well as the lower net financing size of government bonds in March. As a result, in adjusting liquidity in the medium and short term, the PBOC appropriately “tightens water” to release signals aimed at guiding funds to stay stable and preventing major market interest rates from deviating downward too far from the policy rate, which helps stabilize market expectations.

Mingming Team analyzed that, entering April, liquidity conditions are quite loose. On the one hand, the cross-month period ends, and combined with the completion of banks’ quarterly liquidity performance assessments, liabilities are relatively well supplied; on the other hand, April is often a small month for credit, while the full-year issuance plan for special treasury bonds has not yet been released, so the “asset shortage” pattern in the bond market continues. It may also be because, with liquidity already relatively loose, there is not a strong necessity for the PBOC to further step up liquidity supply.

Attention should be paid next to the issuance of 10-year government bonds in the second quarter

“We believe this does not mean the PBOC will continue to tighten medium- and long-term liquidity. After the main market interest rates rise back to around the policy rate, buyout-style reverse repo is expected to resume net injection,” Wang Qing said. Looking at the full year, the PBOC will comprehensively use medium- and long-term liquidity management tools such as the deposit reserve requirement ratio, government bond purchases and sales, MLF, and buyout-style reverse repo to keep liquidity in a relatively stable and ample state. This can ensure the issuance of government bonds, while also sending signals that the quantity-based monetary policy tools will continue to be strengthened.

Wang Qing reminded that it is worth noting that since late February, developments in the Middle East have driven international oil prices to surge sharply. In March, the domestic overall price level showed a strong upward trend, and this also formed some disturbance to the momentum of economic growth. In the short term, in the context of suddenly rising external uncertainties, while maintaining ample liquidity in the domestic money market, domestic monetary policy will also tilt—at least in phases—toward stabilizing prices. The timing of any RRR cut may possibly be delayed. In the later period, if external shocks further intensify disruptions to domestic economic growth, monetary policy will correspondingly increase its appropriately accommodative力度.

However, the issuance situation of 10-year government bonds in the second quarter still needs to be watched. Mingming Team analyzed that because in each month of the second quarter, there are only two 10-year government bonds issued, and considering the increase in ultra-long bond supply after the subsequent special treasury bond issuance plan is implemented, whether the current environment of significantly abundant liquidity can continue is worth monitoring.

What needs to be mentioned is that on March 31, the PBOC website disclosed the content of the first quarterly meeting of 2026 of the Monetary Policy Committee. Compared with the previous quarter’s analysis of domestic and international economic and financial conditions, the latest meeting newly added that it “still faces issues and challenges such as strong supply and weak demand, and external shocks,” whereas the formulation in the previous quarter was “still faces issues and challenges such as prominent contradictions between strong supply and weak demand.”

Mingming Team believes that in the next stage, the PBOC may pay even more attention to hedging the impacts of overseas geopolitical risks, trade conflicts, and other factors on the domestic economy.

Cover image source: Daily Economic News Media Resource Library