China's primary money rates were slightly up for the week after the central bank drained some cash out of the market, though liquidity stress seen in June has abated and helped check any sharp moves. Traders said market sentiment was unaffected by the small cash drain through open market operations, and they were able to square their books.
The volume-weighted average rate of the benchmark seven-day repo traded in the interbank market, considered the best indicator of general liquidity in China, closed at 2.8373 percent on Friday, around 5 basis points above the previous week's closing average rate at 2.7879 percent.
For the week, the People's Bank of China drained a net 30 billion yuan ($4.50 billion) from the market via its reverse bond repurchase agreements, compared with a net drain of 40 billion yuan a week earlier. One trader at a Chinese bank said the central bank's relatively neutral bias in recent open market operations has relieved the market, as it suggested the PBOC would inject some fresh funds if signs of liquidity stress emerge.