(Bloomberg) -- China’s central bank increased its injection of short-term cash into the financial system for the first time since March amid increasing demand for liquidity.

The People’s Bank of China added 30 billion yuan ($4.6 billion yuan) of liquidity with seven-day reverse repurchase agreements, exceeding the 10 billion yuan falling due Thursday. The injection marks an end to its practice of adding 10 billion yuan each trading day for the past three months. The move came after the overnight interbank rate jumped to the highest since February, as lenders sought more funds to buy local government bonds and hoard cash for end-quarter regulatory checks.

The step-up in the cash injection, though made partly to offset seasonal tightness, is significant as it represents a shift in the PBOC’s approach in managing liquidity. Before Thursday, it had done the minimum in catering to investor demand for short-term and one-year cash. The PBOC’s earlier reluctance to boost the cash injection was partly due to low funding costs, but it also showed its concern about a potential buildup in leverage.

“This is to calm down the liquidity fears toward the end of the second quarter, while the net injection is very small,” said Hao Zhou, senior emerging markets economist at Commerzbank AG in Singapore. “PBOC is showing its commitment to maintain stable liquidity conditions.”

China’s sovereign bonds have defied expectations for a selloff this year -- despite a rise in U.S. Treasury yields and signs of a recovery in the domestic economy -- thanks to a slower-than-expected pace of new debt issuance and rising capital inflows. The 10-year government bond yield slid to an eight-month low of 3.06% in May, before rising back to 3.09%.

Still, fears of a selloff are rising again as regional authorities are expected to sell some 660 billion yuan of bonds this month, a move that could drain interbank liquidity, according to Ming Ming, head of fixed-income research at Citic Securities Co. in Beijing. Chinese banks may also become less willing to lend toward the end of June as they prepare for regular liquidity checks by the authorities, reducing cash levels in the system which could be used to buy bonds.

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