China Extends Overnight Repo Operations Through Nov. 2 as Foreign Investment Falls

Key Facts

The People’s Bank of China announced a program of daily overnight reverse repo operations from Oct. 21 to Nov. 2, with a maximum of 1 trillion yuan a day, InvestingLive reported. The move comes as the central bank considers adjusting the maturities of its main open-market instruments, after saying on Oct. 19 that it would study shifting them to an overnight tenor in due course, according to a Caixin report cited by East Money. Available open sources provide no verified details on the total liquidity injected by the central bank or its allocation across different maturities on Oct. 27. The verifiable context therefore centers on the announced operations program, the yuan’s direction and data on economic activity and foreign investment.

The central bank had set the yuan’s midpoint at 6.7162 per dollar on Oct. 26, its strongest reading since Feb. 2, 2023, Reuters reported via MarketScreener. But the midpoint was 471 basis points weaker than Reuters’ estimate of 6.6691, the same report said. China’s spot yuan trading system allows the currency to move within a range of up to 2% in either direction around the daily midpoint. In the offshore market, the dollar/yuan pair closed at 6.66773 on Oct. 26, according to EL7 data. These readings put the currency move in the context of the fixing mechanism and the offshore trading rate, without establishing the benchmark rate or the market’s reaction the following day.

Data from China’s Ministry of Commerce showed actually utilized foreign investment totaled 548.81 billion yuan in January–September 2026, down 4.3% year over year. In September alone, actually utilized foreign investment rose 2.5% from the same month a year earlier, an improvement on the cumulative trend for the nine months. China recorded 47,800 newly established foreign-invested companies during the period, down 2.3% year over year. The figures present two contrasting pictures: a decline in the cumulative total and the number of new companies, alongside monthly growth in September. September’s increase alone does not alter the nine-month trend, but it shows that inflows did not decline in every month of the period.

By contrast, actually utilized foreign investment in high-tech industries rose to 228.53 billion yuan in January–September, up 33.8% from the same period a year earlier. The investment accounted for 41.6% of China’s total actually utilized foreign investment, the Ministry of Commerce said. The share highlights the concentration of a large part of inflows in high-tech sectors, despite the period’s overall decline in investment. The ministry said in a statement, "Actually utilized foreign investment in high-tech industries reached 228.53 billion yuan, up 33.8% year over year, accounting for 41.6% of the total." The sector data offer a different indicator from the number of new companies, showing strong growth in investment value in these industries alongside a decline in the number of new companies.

On economic activity, the official manufacturing purchasing managers’ index was 50.1 in September, up 0.3 percentage point from August and back in expansion territory, according to China’s National Bureau of Statistics. The non-manufacturing business activity index also rose to 50.2, up 1.2 percentage points from the previous month. The two readings put September in expansion territory, with a larger monthly improvement in non-manufacturing activity. The bureau’s data said, "China’s manufacturing purchasing managers’ index came in at 50.1, up 0.3 percentage point from the previous month and back in expansion territory." The readings provide a baseline for comparing later PMI data awaited by investors.

Against the backdrop of the decision to extend overnight operations, the weighted average seven-day repo rate stood at about 1.3179% when the operation was announced in October, below the policy rate, while a Caixin report described funding conditions as comfortable. The report indicates that the overnight instrument was introduced in an accommodative funding environment, as the central bank considered adjusting the maturity of its main instruments. The daily operations program is scheduled to continue through Nov. 2, with a maximum of 1 trillion yuan a day. The program’s end date remains the next near-term milestone in liquidity management, according to the schedule cited by the source.