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China’s Central Bank Moves to Clamp Down on Speculation

PBOC reducing amount of seven-day reverse repurchase agreements to limit access to cheap, short-term credit

SHANGHAI—China’s central bank has made a subtle change to the way it supplies the financial system with cash, a move that market watchers see as an attempt to cool investments in assets such as bonds, which have ballooned on an influx of cheap, short-term money.

For the past two weeks, the People’s Bank of China has been decreasing the amount of the cheap seven-day loans—known as reverse repurchase agreements, or repos—that it makes to commercial banks in its daily money-market operations.