China's central bank drains 70 bln yuan from market

BEIJING, May 3 (Xinhua) -- China's central bank drained 70 billion yuan (11 billion U.S. dollars) from the financial system through open market operations Thursday, with the volume of maturing securities exceeding new injections.

The People's Bank of China (PBOC) pumped 50 billion yuan through reverse repos, with 120 billion yuan of contracts maturing, leading to a net withdrawal of 70 billion yuan.

A reverse repo is a process by which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

The interest rate for the reverse repos was unchanged at 2.55 percent.

The PBOC has recently managed market liquidity through targeted moves rather than across-the-board adjustments of interest rates.

The central bank plans to keep monetary policy prudent and neutral, maintain a stable, reasonable level of liquidity, and oversee moderate growth of financial credit and social financing. Enditem