The PBOC also sold CNY48 bln in 91-day repos at the new higher yield.
The yield on the three-month paper had risen to 1.3684% at the January 7th auction, the first rise since August 13 last year. This marked the start of a much-anticipated move by the PBOC to guide interbank rates higher to increase the attractiveness of holding its sterilization paper relative to extending loans.
The central bank injected a net CNY28 billion in liquidity into the market this week compared with last week's CNY102 billion net drain. This was the first net injection since the week of Oct. 12 last year.
But an increase in banks' reserve requirements took effect on Monday this week, draining some CNY300 billion out of the banking system.
The yield on three-month paper unexpectedly stay unchanged in last week's auction after rising in previous week.
However, unlike three-month paper, the yield of central bank's benchmark one-year sterilization paper rose by another eight basis points at this Tuesday's auction after gaining by a similar amount last Tuesday.
Some traders believe that the central bank is keeping a lid on the three-month paper yield while guiding the rate on one-year paper higher in order to widen the spread and make the longer-dated paper more attractive.
