Dealers said they expected the money rates to continue to fall in coming days thanks to ample liquidity in the market.

Market players are preparing for the one-week long Chinese New Year Holiday, starting on Feb. 9.

"Money demand is really weak given that most institutions are not short on funds," said a dealer at a Chinese commercial bank in Shanghai. "Also, it's not hard to borrow money at present."

The benchmark weighted-average seven-day bond repurchase rate fell 11 basis points to 3.00 percent from 3.11 percent at the close on Tuesday.

The 14-day repo rate dipped to 3.01 percent from 3.18 percent, and the one-day repo rate was down to 2.09 percent from 2.12 percent.

The key seven-day rate hovered around 3 percent for most of last month until Dec 20, when the traditional year-end squeeze pushed the rate up to peak at 4.58 percent on the last day of the year. A rate below 3 percent is generally seen as indicating loose conditions.