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Central bank to sell $10b of 3-month bills

(Xinhua)
Updated: 2009-03-12 00:19

China's central bank announced Wednesday a sale of 70 billion yuan (about $10 billion) of three-month bills in Beijing on Thursday.

Related readings:  Central bank cracks down on fake money  China lowers threshold for bond market entry  Central bank warns of tough economic challenges

The move was aimed at maintaining a steady growth in the country's monetary base and keeping interest rates stable, said the People's Bank of China in a statement.

Since the beginning of 2009, the central bank has increased the frequency of its three-month bill sales. In February, it sold three-month bills once every week. Thursday's sale will be the biggest one since May 2008.

A Guosen Securities report said the amount of liquidity in the market is abundant and commercial banks need more channels for short-term investment. Three-month bill sales helped broaden the channels.

Analysts said the central bank might continue to drain funds from the market as new yuan-denominated loans reached about 2.5 trillion yuan in the first two months, but it will leave it on track to conduct a small net injection into the market in March as several previous sales will be due this month.