China's central bank said Tuesday it injected cash into the country's financial system, in a move seen as heading off a potential liquidity crunch ahead of the country's lunar new year holiday.

The People's Bank of China (PBoC) injected 255 billion yuan ($42.1 billion) worth of funds into the interbank market on Tuesday, according to a statement.

Demand for cash traditionally soars ahead of the Chinese New Year, which starts next week, as hundreds of millions of Chinese return to their hometowns.

The injection came after the country's financial system was hit by separate cash crunches last year, the most recent in December, that sent interbank interest rates soaring and led to worries about the stability of the country's banking system.

The liquidity move followed one late Monday by the central bank, which said in a separate statement that it had provided short-term liquidity to some large commercial banks, without giving the amount.

"The capital injections were mainly targeted at cash demand before the New Year," Shenyin and Wanguo Securities analyst Qian Qimin told AFP.