China auctions 50b yuan in treasury deposits

BEIJING - The People's Bank of China (PBOC) on Thursday auctioned 50 billion yuan ($8.15 billion) in 6-month treasury cash deposits at an interest rate of 5.01 percent.

The rate, lower than the 6.5 percent recorded during the last round of treasury deposit sales on June 20, indicated easing liquidity pressure in the banking system after recent turmoil in the money market, analysts said.

Selling treasury deposits means a transfer of government money from the central bank to the commercial banking system. It is designed to help the Finance Ministry earn a higher return on its deposits, and meanwhile, it will boost liquidity in the banking system.

The central bank is scheduled to auction another 50 billion yuan in treasury deposits on July 18.

Market insiders said the interest rate is still at a relatively high level and the monetary environment will continue to be relatively tight.