China's central bank calms liquidity worries

BEIJING - China's current liquidity is rich and moves to soak up liquidity do not mean changes in monetary policy, a central bank source said on Wednesday, as Chinese shares continue to endure stock market falls.

China's money market rates have been running low with the Shanghai Interbank Offered Rate (Shibor), a gauge of interbank borrowing costs, below 2 percent for the overnight reading and below 4 percent for the seven-day reading, the official with the People's Bank of China told Xinhua.

Banks reported rich liquidity after the Spring Festival and the central bank has conducted repo operations to slow the growth in liquidity, said the source, who declined to be named.

The repo operations are normal moves after the Spring Festival to keep money market rates at reasonable levels, and they do not indicate any changes in monetary policy, according to the source.

Chinese shares have been slumping since last Thursday amid worries on market liquidity tightening.