China’s benchmark money-market rate plunged on Thursday as the central bank injected US$29 billion into the banking system to ease a cash crunch in the run-up to the Chinese New Year holiday, Bloomberg reported. The rate, which gauges funding available in the financial system, fell to 5.98% after touching 8.18% the previous day, the highest level since June 2011. The People’s Bank of China injected the cash using 14-day reverse repurchase contracts, the same method it used to pump US$26.8 billion into the market on January 17. The bank has also released an additional US$75.5 billion this month via bill redemptions. Analysts called the reverse repurchase contracts “a short-term solution” to the cash squeeze. “These reverse repos will have to be replaced by a permanent reserve-ratio cut,” said Pin Ru Tan, a rates strategist at HSBC Holdings Plc (HBC.NYSE, 0005.HKG, HSBA.LON). The Chinese central bank last month cut the reserve ratio for banks for the first time since 2008.