BEIJING - China's central bank skipped open market operations on Tuesday, citing relatively high liquidity in the banking system.

"The overall liquidity level in the banking system is relatively high as fiscal spending increases near the end of month," the People's Bank of China (PBOC) said in a statement.

Fiscal expenditure allows fiscal deposits to flow into commercial banks from the central bank, improving market liquidity.

The suspension of open market operations followed an injection of 150 billion yuan into the market by the PBOC through reverse repos on Monday.

In Tuesday's interbank market, the overnight Shanghai Interbank Offered Rate, which measures the cost that Chinese banks lend to one another, dropped 1 basis point to 2.561 percent, with the rate for one-week loans edging down 0.9 basis point to 2.861 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 plans to maintain a prudent and neutral monetary policy in 2018 as it strives to balance growth and risk prevention.