The People's Bank of China injected 200 billion yuan of cash into the financial system via the medium-term lending facility at 3.30%, according to an Oct. 16 notice from the central bank.
The move was unexpected as authorities usually inject liquidity when previously offered loans are due, and the next batch will not mature until Nov. 5, Bloomberg News reported.
The central bank likely wants to inject more long-term liquidity to support the economy, said Becky Liu, head of China macro strategy at Standard Chartered Plc. China is expected to release third-quarter GDP data on Oct. 18. The country's GDP is expected to have grown at 6.1%, the slowest pace since at least 1992.
As of Oct. 15, US$1 was equivalent to 7.08 Chinese yuan.