China central bank injects cash into big banks as rates spike

BEIJING/SHANGHAI Mon Jan 20, 2014 6:55am EST

A man looks at the Pudong financial district of Shanghai November 20, 2013. REUTERS/Carlos Barria

A man looks at the Pudong financial district of Shanghai November 20, 2013.

Credit: Reuters/Carlos Barria

BEIJING/SHANGHAI (Reuters) - China's central bank has provided emergency liquidity to support large commercial banks through its Standing Lending Facility (SLF) and will inject additional funds in open market operations on Tuesday, authorities said on Monday.

The move comes as a key interest rate that China's banks charge for short-term loans to each other equaled a six-month high on Monday, largely due to seasonal cash demand ahead of the Chinese Lunar New Year holiday, which begins on January 31.

The People's Bank of China (PBOC) made the announcement on its official Twitter-like Sina Weibo microblog.

The announcement also comes after sources told Reuters on Monday that smaller banks would be able to access emergency short-term loans through the SLF.

(Reporting by Gabriel Wildau; Editing by Jason Subler)