SHANGHAISINGAPORE, July 12 Reuters China39;s central bank is widely expected to leave a mediumterm interest rate unchanged and drain some cash from the banking system when rolling over such maturing loans on Monday, a Reuters survey showed.

While the economy continues to sputter, a weak Chinese currency has remained the key constraint limiting Beijing39;s monetary easing efforts, as that could further widen the yield gap with other major economies, particularly the United States, and trigger more capital outflows.

In a Reuters poll of 35 market watchers conducted this week, 34, or 97, of respondents expected the PBOC to keep the interest rate on the oneyear mediumterm lending facility MLF loan unchanged at 2.50 from the previous operation.

The lone outlier in the poll projected a marginal rate reduction.

Market participants believe the significance of the mediumterm lending facility MLF rate will gradually diminish as the People39;s Bank of China PBOC tries improve the effectiveness of its interest rate corridor.

The PBOC introduced a new cash management mechanism this week and its Governor Pan Gongsheng said recently that the sevenday reverse repo rate basically fulfils the function of the main policy rate

The importance of MLF rate may decline, with PBOC more focusing on buying or selling Chinese government bonds CGB around the reverse repo rate in the short tenor, said Ju Wang, head of Greater China FX rates strategy at BNP Paribas.

The new liquidity…