China's central bank Tuesday injected the largest daily amount of money into the banking system via open market operations to ease a liquidity thirst before a week-long holiday.

The People's Bank of China conducted 190 billion yuan of 28-day reverse repurchase and 100 billion yuan of 14-day contracts, according to its statement.

The PBOC set an interest rate of 3.45 percent for 14-day contracts and 3.6 percent for 28-day ones, flat from previous weeks, that banks should pay for the funds.

The seven-day repo rate, a measure of borrowing cost among banks and an indicator of liquidity strain, yesterday rose for the seventh consecutive working day to a seven month-high of 4.7408 percent.

Analysts said the measure is to ease liquidity pressure at the end of the quarter, and signaled the PBOC will not cut reserve requirement for banks in the short term.

The incessant open-market operations signaled the central bank is favoring more delicate monetary tools to support liquidity and that it is reluctant to resort to blunter monetary instruments such as reserve requirement ratio, said Zhang Mo'nan, a researcher at the National Information Center, a government think tank.

"Banks now have a strong need for liquidity," said He Yifeng, a senior bond analyst at Hongyuan Securities. "They are preparing for more cash withdrawals and purchases of foreign currencies during the coming holiday, while they also need to keep more deposits" for book-keeping purposes.

He said the PBOC is relying more on open market operations than cutting reserve requirement ratio to adjust market liquidity amid an uncertain inflationary outlook after the US adopted easier monetary policies this month.