China drains liquidity amid record inflation

Updated: 2011-08-09 15:31


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BEIJING - The People's Bank of China, or the country's central bank, auctioned off 2 billion yuan ($308 million) in one-year bills on Tuesday, its latest effort to curb China's staggeringly high inflation rate.

The bills were sold at an average yield of 3.49 percent in Tuesday's open market operations. The yield was unchanged for the sixth week in a row and was in line with market expectations.

The central bank will drain 83 billion yuan from money markets through 28-day bond repurchase agreements on Tuesday, the first such operation in two weeks.

A total of 192 billion yuan in central bank bills and repurchasing agreements matured this week, the largest amount seen so far this month, said Li Huaiding, an analyst with Guosen Securities.

China's inflation rose to a higher-than-expected rate of 6.5 percent in July, putting the central bank in a bind as it tries to keep prices in check without hurting the country's economy.