China's central bank skips open market operations

BEIJING - China's central bank skipped open market operations on Saturday, citing sufficient liquidity in the banking system.

The People's Bank of China said liquidity has been at a relatively high level, and could offset factors that drain liquidity from the market.

A reverse repo is a liquidity-injecting process by which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

Liquidity is usually strained because of high cash demand before the week-long holiday of the Spring Festival, or Chinese Lunar New Year.

However, the central bank cut the reserve requirement ratio by another 0.5 percentage points on Jan 25 following a 0.5-percentage-point reduction on Jan 15, which is expected to unleash a total of 1.5 trillion yuan ($223.88 billion) of liquidity into the banking system.

Saturday's data shows the overnight Shanghai Interbank Offered Rate, which measures the cost at which banks lend to one another, climbed 16.4 basis points to 2.26 percent. That for one-month loans dipped 1.6 basis points to 2.82 percent.