PBOC Drains Cash as Overnight Rate Slides to Lowest in 10 Months

China’s central bank drained cash from the financial system for the second time this week as the rate banks charge one another for overnight loans sank to the lowest level in 10 months.

The People’s Bank of China said it sold 60 billion yuan ($9.9 billion) of 14-day repurchase contracts at 3.8 percent, after auctioning 48 billion yuan of the agreements at the same rate on Feb. 18. Repos were conducted this week for the first time since June after data indicated aggregate financing, the broadest measure of credit, was a record 2.58 trillion yuan in January. Manufacturing is shrinking at the fastest pace in seven months, a preliminary Purchasing Managers’ Index showed today.