China's central bank continues to drain liquidity

BEIJING -- China's central bank on Thursday continued to drain liquidity by 52 billion yuan ($8.46 billion) through open market operations.

The People's Bank of China said in a statement that it conducted a 14-day forward repurchase operation (repo) of 32 billion yuan at a bid rate of 3.8 percent and a 28-day repo of 20 billion yuan at 4 percent.

Together with the 28-day repo on Tuesday, the central bank drained a total of 98 billion yuan this week, making clear its target to mop up excessive liquidity from the market.

The new operation has pushed up interbank lending rates.

The overnight of Shanghai Interbank Offered Rate (Shibor), a gauge of interbank borrowing costs, moved up 13.8 basic points to 2.66 percent, while the seven-day rate advanced 94.4 basic points to 4.81 percent.

In the wake of the operation, Chinese shares closed lower on Thursday. The benchmark Shanghai Composite Index dropped 0.83 percent to 2,046.59 points, while the Shenzhen Component Index lost 0.98 percent to 7,173.02.

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