China's central bank continues to drain liquidity from market

BEIJING - China's central bank continued to drain liquidity from the financial system Thursday, with more reverse repos maturing than conducted.

The People's Bank of China (PBOC) conducted 40 billion yuan ($5.8 billion) of seven-day reverse repos at an interest rate of 2.55 percent and 20 billion yuan of 14-day reverse repos at 2.7 percent, according to a PBOC statement.

The interest rates were unchanged from previous operations.

As 150 billion yuan of reverse repos matured Thursday, the PBOC effectively withdrew 90 billion yuan of funds from financial institutions.

On Wednesday, the PBOC conducted 40 billion yuan of reverse repos, while 110 billion yuan of reverse repos matured.

The PBOC said Thursday's operation was aimed at maintaining "reasonably abundant liquidity" in the banking system.

Through reverse repos, the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.