China's central bank on Thursday injected funds of 120 billion yuan (about 17.5 billion U.S. dollars) through open market operations to ease liquidity pressure. The People's Bank of China (PBOC) conducted 100 billion yuan of seven-day reverse repos at an interest rate of 2.55 percent and 20 billion yuan of 14-day reverse repos at an interest rate of 2.7 percent. The move was aimed at offsetting the impact of tax payments and government bond issuances and keeping liquidity in the banking system at a reasonable and ample level, the PBOC said on its website. A reverse repo is a process by which the central bank bids and buys securities from commercial banks, with an agreement to sell them back in the future.
In Thursday's interbank market, the overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which banks lend to one another, fell 2.7 basis points to 2.53 percent.