China's central bank injected a net 20 billion yuan (about 3.03 billion U.S. dollars) into the market via open market operations on Friday to ease the liquidity strain.

The People's Bank of China (PBOC) conducted 50 billion yuan of reverse repos Friday, pumping a net 20 billion yuan into the market as 30 billion yuan of reverse repos matured.

A reverse repo is a process by which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

On Friday, the PBOC conducted 30 billion yuan of seven-day reverse repos priced to yield 2.45 percent, 10 billion yuan of 14-day contracts with a yield of 2.6 percent, and 10 billion yuan of 63-day contracts with a yield of 2.9 percent.

The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in interest rates or reserve requirement ratios.

China set the tone of its 2017 monetary policy as prudent and neutral, keeping appropriate liquidity levels but avoiding excessive liquidity injections.

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