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China's central bank says liquidity in the financial market became tighter in May. This is the first time the bank's noted tighter liquidity in its monthly report since November 2008. Fewer bonds were issued in the inter-bank market, and long term bonds accounted for a greater proportion of the total.
The central bank also says interest rates in the money market were rising fast. Inter-bank borrowing and bond interest rates rose by over 30 basic points compared to April.
Analysts say the capital tightening is partly due to the central bank's hike on May 10th, that raised the banking reserve requirement ratio.