China's central bank will inject 10 billion yuan ($1.53 billion) into the money markets through seven-day reverse bond repurchase agreements on Friday, traders said.
This will bring the total net drain from the market this week to 455 billion yuan, the most in three years. This figure does not include last Sunday's injection.
The central bank increased the frequency of open market operations between Jan. 29 and Feb. 19 to maintain liquidity before and after the Lunar New Year.
The central bank said on Thursday evening it would conduct open market operations on a daily basis starting Feb. 18.
Until now, the People's Bank of China (PBOC) has held open market operations generally twice a week. Conducting such operations daily could give it more flexibility in managing the amount of cash in the financial system.
It injected no liquidity into the banking system last week as Chinese financial markets were closed for the Lunar New Year holiday.
Reverse repos inject liquidity on issuance and drain it on maturity