MNI: PBOC Drains Net CNY30 Billion Thursday Via Skipping OMOs

     BEIJING (MNI) - The People's Bank of China skipped its open-market

operations on Thursday, saying that an increase in fiscal spending toward the

year-end can hedge the impact of maturing reverse repos and that liquidity

conditions are still at a high level.

     This resulted in a net drain of CNY30 billion for the day, as a total of

CNY30 billion in reverse repos mature on Wednesday. It is the fifth consecutive

trading day that the PBOC has skipped the OMOs.

     The PBOC has drained a net CNY240 billion from the interbank market so far

this week. Analysts said the the central bank's decision has worsened the

structural problem of liquidity, particularly when the demand is increasing at

year-end. 

     The CFETS-ICAP money-market sentiment index ended at 54 on Wednesday,

slightly down from 56 at Tuesday's close. The lower the reading the better the

liquidity conditions in the interbank market. 

     The benchmark seven-day repo average was last at 2.6680%, compared with

2.8773% on Wednesday. 

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: rich.dirks@marketnews.com

[TOPICS: MMQPB$,M$A$$$,M$Q$$$,MN$MM$]