China's central bank drained liquidity from the financial system as it suspended open market operations Friday due to a fiscal spending increase.
As rising fiscal spending near the end of month has offset maturing reverse repos, the liquidity level in the banking system is "relatively high," the People's Bank of China said on its website.
On Friday, 160 billion yuan (about 24.11 billion U.S. dollars) of reverse repos matured, meaning that market liquidity would drop by the same amount.
Central bank data showed a total of 360 billion yuan has been drained from the market this week as mature reverse repos offset new cash injections, the highest level in nearly 33 weeks.
In the previous trading week, 450 billion yuan was pumped into the money market.
The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in interest rates or reserve requirement ratios.
China has set the tune of its monetary policy in 2017 as prudent and neutral, keeping an appropriate liquidity level but avoiding excessive liquidity injections.
