* C.bank drains 30 billion yuan via open market ops
* Banks meet regular RRR payments due on Tuesday
* Market players cite increasing money demand
* China Dev. Bank bond auction seen fueling demand
By Chen Yixin and Gabriel Wildau
SHANGHAI, June 5 (Reuters) - China's key money rate rose slightly on Tuesday after the People's Bank of China drained funds via open market operations, with dealers citing increased money demand.
China's central bank will drain 30 billion yuan ($4.71 billion) from the money markets through 28-day bond repurchase agreements on Tuesday, traders said.
The benchmark weighted-average seven-day bond repurchase rate rose 6.55 bps to 2.5998 percent near midday, from Monday's close of 2.5343 percent, while the shortest overnight rate rose 8.12 bps to 2.0052 percent.
"Money is still ample today, but we can feel the money demand is stronger than previous days," said a dealer at a state-owned bank in Shanghai.
Banks still need funds to make regular payments to meet reserve requirement ratios (RRR) on Tuesday. Banks must make regular payments on the 5th, 15th and 25th in order to meet the RRR, with the amount of the payment adjusted in line with their current volume of deposits.
Demand for funds was also fuelled by a bond auction by China Development Bank, which sold a total of 30 billion yuan in one-, three-, five-, seven- and ten-year bonds.
China's interest-rate swaps (IRS) rose slightly on Tuesday, with one-year interest-rate swaps rising to 2.43 percent - up seven bps from Monday's close - and five-year IRS up 2.75 percent by midday from Monday's 2.67 percent.
Current Prev close Change
(pct) (bps) 7-day repo 2.5998 2.2343 +6.55 7-day SHIBOR 2.5967 2.5183 +7.84 Note: Repo rate is weighted average. ($1 = 6.3690 Chinese yuan) (Editing by Richard Pullin)