SHANGHAI: China's benchmark money rate was little changed on Tuesday with dealers citing ample liquidity in the market, which offset the impact of a large fund drain in open market operations.
"Money is still very ample in the market, especially the overnight one," said a dealer at a Chinese bank in Shenzhen.
But dealers said market players remained cautious as banks held on to cash to meet regulatory requirements, including loan-to-deposit ratios, due at the end of March.
Money market conditions often tighten near month-end or quarter-end as banks stockpile cash on expectations of heavier customer withdrawals and to meet required regulatory thresholds. But dealers said the traditional month-end squeeze appeared to have little impact on money conditions this month.
China's central bank drained 70 billion yuan ($11.09 billion) from the money markets through 28-day bond repurchase agreements on Tuesday.
"The amount maturing this week is large, so it's natural that the central bank drains more money via the open market," the Shenzhen bank dealer said. "But we don't think it will conduct a huge net drain this week."
The weighted-average seven-day bond repurchase rate was almost flat at 3.3062 percent at midday compared with 3.2994 percent at the close on Monday.
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