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China's Central Bank Drains Funds, Again

Tuesday, 26 Feb 2013 | 3:10 AM ET
People's Bank of China in Beijing, China
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People's Bank of China in Beijing, China

China's money rates jumped on Tuesday after the central bank continued to drain funds from the market, sparking uncertainties about regulators' intentions toward the interbank market.

China's central bank drained 5 billion yuan ($802.07 million) from the money markets through 28-day bond repurchase agreements on Tuesday.

(Read More: Is This the Start of China's Tightening Cycle?)

Shanghai Securities News, an official local newspaper, reported on Tuesday that although the People's Bank of China might continue to suspend the reverse repo this week, it does not mean China will tighten monetary policy given the economic recovery is still not solid.

The benchmark weighted-average seven-day bond repurchase rate jumped 52 basis points to 3.81 percent from 3.29 percent at the close on Monday.

The 14-day repo rate rose to 4.23 percent from 3.36 percent, and the one-day repo rate rose to 3.73 percent from 2.41 percent.

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