BANKS saw their borrowing cost fall for the 10th straight day yesterday as market liquidity improved despite an uncertain regulatory outlook.

The benchmark weighted-average seven-day bond repurchase, or repo, rate dipped by 6 basis points to 3.60 percent from 3.66 percent on Monday, according to the Shanghai Interbank Offered Rate published daily.

The rate has fallen to the usual range of 3 to 4 percent and is about one third of 13.44 percent - a decade high - on June 20 as the central bank refrained from adjusting liquidity to the market.

Haitong Securities said in a report that market liquidity is returning to normal but banks are still cautious about using abundant funds as the regulatory stance is unclear and the economic outlook is uncertain.

The State Council last Friday vowed to keep monetary policy neutral and encourage financial institutions to better use the money at hand.