China’s central bank drains $16 billion from market

Beijing, May 13 (IANS) China’s central bank drained 110 billion yuan ($16 billion) from the market this week to ensure a stable money supply, officials announced on Friday.

The move followed the draining of 220 billion yuan from the financial system last week, Xinhua news agency reported.

The People’s Bank of China (PBOC) conducted 250 billion yuan in seven-day reverse repurchase agreements this week, a process in which central banks purchase securities from banks with an agreement to resell them in the future.

On Friday’s interbank market, the benchmark overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one another, was up by 0.2 basis points to 2.002 percent.

The Shibor for seven-day loans dropped 0.1 basis point to 2.324 percent. The Shibor for three-month loans rose 0.8 basis point to 2.9035 percent.

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