BEIJING - Borrowing costs among Chinese banks climbed to record highs in the money market on Wednesday, as lenders remain desperate for cash ahead of Spring Festival despite the central bank's liquidity injection.

The Shanghai Interbank Offered Rates (Shibor), which measure the cost for banks of borrowing from one another as a key barometer of liquidity, were higher for short-term borrowing no longer than three months.

The overnight Shibor rose 80 basis points to an all-time high of 8.1667 percent, after a sharp increase of 189.42 basis points on Tuesday. The overnight Shibor was just 3.24 percent a week ago.

Meanwhile, the Shibor for one-week and two-week terms both hit new highs at 8.8083 percent and 9.2356 percent, up 48.83 basis points and 143.64 basis points, respectively.

"It seems the central bank's intervention of the money market through 14-day reverse repurchase agreement (repo) operations Tuesday has failed to meet the market demand," said Shi Lei, an analyst with the fixed income department of the Ping'an Securities.

The People's Bank of China (PBOC), or the central bank, on Tuesday conducted 14-day reverse repo operations worth 169 billion yuan ($26.72 billion) to ease a liquidity squeeze ahead of the week-long Spring Festival holiday, which begins on Sunday.

The most important annual holiday in China typically sees Chinese withdrawing money from banks for celebrations, and companies paying year-end bonuses.

In the interbank market, higher Shibor rates indicate banks will have more difficulty borrowing from their peers.

As China's yuan positions for foreign exchange currencies are expected to drop by nearly one-third to between 2 trillion yuan and 2.5 trillion yuan this year, Shi said, lowering lenders' reserve requirement ratio (RRR) is inevitable in 2012 to release more liquidity back to banks.

He expected the PBOC to cut the RRR three times in the first half.