The People’s Bank of China (PBOC) announced on Sunday, Feb. 2, that it will “inject 1.2 trillion yuan (US$174 billion) via reverse repo operations on Feb. 3 to ensure sufficient liquidity supply” in the face of the “epidemic situation.”
“The liquidity of the overall banking system will be 900 billion yuan (US$1.30 billion) more than the same period of last year,” PBOC added.
This is the first time China’s central bank has made such an announcement and also marks its largest single-day reverse repo operation so far.
The announcement came after the outbreak of the novel coronavirus killed at least 304 people and infected more than 14,380 in mainland China as of Sunday, according to the South China Morning Post.
China’s financial markets are expected to be volatile when it resumes trading on Monday after an extended Lunar New Year holiday due to the coronavirus pandemic.
The country’s economic activity has ground to a near standstill as authorities take aggressive measures to contain the outbreak, curbing public transportation, shuttering entertainment venues, and shortening business hours.
The money injection is among 30 measures China has announced this weekend alone to deal with the coronavirus outbreak.
Chinese leader Xi Jinping on Sunday also ordered the Defense Ministry to deploy 1,400 medical staff to a new hospital in Wuhan, Hubei Province, the epicenter of the outbreak.
The country had earlier issued travel restrictions that have locked down more than a dozen cities in Hubei Province.
The China Securities Regulatory Commission said on Sunday it was considering unveiling a hedging instrument to offset any panic in the market and would suspend evening futures trading starting on Monday.
Economists have forecast the world’s second largest economy may grow less than 5% in the first quarter of 2020, down from 6% in the fourth quarter of 2019.