China's Central Bank Drains Cash from System, Calming Concerns Over Funding Squeeze
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China's central bank withdrew cash from the financial system, suggesting it views the surge in short-term rates as temporary.
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The PBOC drained 109 billion yuan from money markets by providing less short-term loans than were maturing.
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The overnight rate had spiked to 50% in some transactions Tuesday, sparking concern over potential stress.
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Funding conditions eased Wednesday as large banks made more cash available for borrowing.
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Analysts say the PBOC still likely to cut banks' reserve requirements within months to support growth.