"Rising fiscal expenditure near the end of the month keeps the banking system liquidity at a high level," the People's Bank of China said on its website.
A reverse repo is a process by which the central bank purchases securities from commercial banks through bidding, 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 27.7 basis points to 2.262 percent, the lowest level in nearly three weeks. The Shibor rate for one-month loans dipped slightly to 2.697 percent.
China has decided to maintain a prudent and neutral monetary policy in 2018.
The country vowed to maintain control over the floodgates of monetary supply and keep liquidity at a reasonable and ample level, according to a statement issued after a meeting of the Political
Bureau of the Communist Party of China Central Committee in July.