China's central bank Monday pumped 265 billion yuan (38.6 billion U.S. dollars) of funds into the market via the medium-term lending facility (MLF) to maintain liquidity.
The funds will mature in one year with an interest rate of 3.3 percent, unchanged from previous operations, according to the People's Bank of China (PBOC).
With no PBOC liquidity tools maturing Monday, the operation effectively led to a net injection of the same amount of funds.
The move followed a resumption of reverse repos by the PBOC last week after 15 consecutive trading days of suspension.
On a net basis, the central bank injected 330 billion yuan of funds into the market via reverse repos last week.
Analysts said the MLF operation was aimed at offsetting the impact of government bond issuances, tax payments, quarterly regulatory assessment on banks and a stronger demand for cash ahead of the Mid-Autumn Festival and the National Day holidays.
The MLF tool was introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank using securities as collateral.
China vowed to maintain control over the floodgates of monetary supply and keep liquidity at a reasonable and ample level, according to a statement issued after a meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee in July.
