Rise in repo rate not a sign of policy tightening

With the renminbi on the cusp on joining the IMF’s SDR basket, the PBOC appears to have been working hard to hold it steady in recent weeks. Meanwhile, attention has been drawn to a pick-up in the 7-day repo rate, which the PBOC has begun to adopt as a policy target. We suspect that seasonal factors rather than policy tightening were at play.

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