But dealers still reported ample liquidity in the market given low demand and expect that money rates will fall back after the holidays.

"I don't feel funds are very tight. Today is the last trading day before the holidays and few institutions still need money," said a dealer at a Chinese commercial bank in Shanghai.

China's market will be closed from Tuesday to Thursday for the New Year.

Money conditions at year end are much better than last year's, with the benchmark weighted-average seven-day bond repurchase rate at 4.5805 percent, compared with 5.6014 percent at the close of 2011 but up slightly from Friday's 4.1200.

The 14-day repo rate fell to 4.5986 percent from 4.6194 percent on Friday, and the one-day repo rate jumped to 3.8634 percent from 2.3096 percent.

Traders said the jump in the one-day rate was because this tenor would actually mature after the holiday, which made it effectively a three-day rate.

Dealers expect the People's Bank of China to maintain its current approach to monetary policy at the beginning of next year but they expect rates to decline quickly.

The policy that the PBOC employed successfully in the second half of 2012 focused on keeping rates stable through the usage of short-term reverse repurchase agreements to maintain liquidity in the interbank market, without resorting to more drastic measures like cuts to interest rates or bank reserve ratios.