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China's central bank drains liquidity via repo

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BEIJING, March 13 (Xinhua) -- The People's Bank of China, the central bank, announced on Thursday a forward repurchase operation (repo) of 100 billion yuan (16.4 billion U.S. dollars) from the money market.

The 28-day repo at a yield of 4 percent, together with another 100 billion yuan in repos launched on Tuesday, resulted in a net capital withdrawal of 40 billion yuan from the banking system this week after deducting 160 billion yuan worth of repos due this week.

Thursday's repo is the eighth time the central bank has launched repos since Feb. 18, repurchasing a total of 565 billion yuan.

China's money market rates are running low, indicating abundant liquidity in the banking sector.

The Shanghai Interbank Offered Rate (Shibor), a gauge of interbank borrowing costs, stood at 1.96 percent for the overnight reading and 2.5 percent for the seven-day reading.

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