Chinese central bank drains 70 bn yuan from market

Beijing:China's central bank on Tuesday drained 70 billion yuan ($10 billion) from the market. The People's Bank of China (PBOC) put 50 billion yuan into a seven-day reverse repo, a process by which central banks purchase securities from banks with an agreement to sell them back in the future, Xinhua news agency reported. The reverse repo was priced to yield 2.25 percent, according to a PBOC statement. Reverse repo worth 120 billion yuan matured on Tuesday, so the central bank has effectively drained 70 billion yuan from the market. On Tuesday's interbank market, the benchmark overnight Shanghai Interbank Offered Rate (Shibor) was up by 0.2 basis point to 2 percent. The Shibor for seven-day loans also increased 0.3 basis point to2.34 per cent. The Shibor for three-month loans stayed flat at 2.946 percent.