People’s Bank Of China Continues To Drain Money From Market

China is at it again. The country's central bank on Tuesday pumped 80 billion yuan ($11 billion) into the money market via seven-day and 14-day reverse repos, after draining 174.5 billion yuan on Monday.

This follows a similar move earlier this year, when People's Bank of China drained 110 billion yuan from the market to ensure a stable money supply.

The reverse repos is a process by which central banks purchase securities from banks with an agreement to sell them back in the future.

Data from Wind, a financial information provider, showed that a total of 90 billion yuan was purchased by the central bank on Tuesday, meanwhile there is 132 billion yuan of medium-term lending facility (MLF) and 80 billion yuan of treasury cash deposit at maturity.

The MLF tool was first introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank by using securities as collateral. On Tuesday's interbank market, Shibor stood at 2.17 per cent, 1.4 basis points higher than Monday.

With inputs from IANS.