China's central bank auctioned 15 billion yuan (2.2 billion U.S. dollars) of one-year bills in its regular open market operations Tuesday, with the yield rising for the first time in 20 weeks.

The yield of the one-year bills issued by the People's Bank of China (PBOC), the central bank, rose by 8.32 basis points to 2.0096 percent, the first hike since January 19.

Analysts said the yield rise reflected rising costs for banks to raise capital and tight monetary conditions in the market.

"The money market was already tight with a rising short-term interest rate level. The yield of the one-year bill can't hold at the previous level," said He Yifeng, a senior research fellow at Hongyuan Securities.

The yield of the one-year bill has stood unchanged at 1.9264 percent for the past 19 weeks while the yield of three-month bills also rose by 4.02 basis points to 1.4896 percent last week.

Inflationary expectations were declining while a slowdown in economic growth was expected for the rest of the year, He said.

"Thus the rise of central bank bill yield has nothing to do with the expectation of an interest rate hike," He said.

The current one-year bill yield was nearing the 2.25-percent interest rate for one-year term deposits in China and any further rises would trigger speculation in the market of a rise in interest rates.

Zhao Qingming, a senior research fellow with China Construction Bank (CCB), the country's second largest lender, said the government had more options to curb consumer price hikes as vegetable prices fell in May and the European debt crisis had eased external inflationary pressures.

"I think it is less likely for the market to expect an interest rate hike in the short term," Zhao said.

The Bank of China's sale of 40 billion yuan (5.85 billion U.S. dollars) of convertible bonds this week, subscriptions for which open Wednesday, also locked up a great amount of liquidity in the market, traders said.

"After the subscription ends on June 7, I think the tight monetary conditions will improve following the central bank's injection of liquidity into the open market," said He, of Hongyuan Securities.

The PBOC favored short-term monetary instruments like three-month and one-year bills to increase policy flexibility with fewer open market operations during the past weeks.

The PBOC has sold only 15 billion yuan in bills so far this week, but 144 billion yuan (21.1 billion U.S. dollars) worth of bills and repurchase agreements are due to mature this week.

It injected 145 billion yuan (21.23 billion U.S. dollars) into the market last week.