MNI: PBOC Drains Net CNY40 Billion Wednesday Via Skipping OMOs

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

operations on Wednesday, 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 CNY40 billion for the day, as a total of

CNY40 billion in reverse repos mature on Wednesday. It is the fourth consecutive

trading day that the PBOC skipped the OMOs.

     The PBOC has drained a net CNY210 billion from the interbank market so far

this week. Traders said the operation of the central bank has influenced the

market sentiment, particularly when the liquidity demand is increasing at the

year-end. 

     The CFETS-ICAP money-market sentiment index ended at 56 on Tuesday, up from

45 at Monday's close. The lower the reading the better the liquidity conditions

in the interbank market. 

     The benchmark seven-day repo average was last at 2.6650%, compared with

2.9317% on Tuesday.

--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$MM$]