China central bank adds half-day leeway for query time on open-market ops: traders

SHANGHAI (Reuters) - China's central bank has shifted the time slot for primary dealers in open market operations to report their cash demand, two traders with direct knowledge of the matter said on Thursday.

The move took effect this week, giving dealers more time to gauge their own demand for funds by reporting in the afternoon to the People's Bank of China (PBOC), rather than the morning, they said, to help the bank decide the next day's operations.

The step could also improve the accuracy of daily open market operations, the traders said, adding that the adjustment was not a response to recent sharp volatility in the interbank money market.

One of China's key short-term money rates surged to a near six-year high, driven by a combination of the central bank's extended net drain of cash from the financial system and higher holiday demand.

The central bank injected 100 billion yuan ($15.44 billion) via open market operations on Thursday, but still withdrew 150 billion yuan on a net basis as 250 billion was set to expire. This week,it has drained a net 568.5 billion yuan.

The PBOC started daily open market operations ahead of the 2016 Lunar New Year holiday, in a bid to manage the amount of cash in the financial system more flexibly.

($1=6.4763 Chinese yuan)

(Reporting by Hongwei Li, Steven Bian and Andrew Galbraith; Writing by Winni Zhou; Editing by Clarence Fernandez)