CHINA MARKETS: Yuan Falls; Rates Mixed; Stocks Up

     BEIJING (MNI) - The yuan fell against the U.S. dollar Monday morning even

though the PBOC set a stronger fixing for the day.

     According to media reports,the PBOC announced on Friday evening that the

reserve requirement for forward FX purchases will be reduced to 0% from the

previous 20%, effective on Monday, which was interpreted by traders as meaning

that the central bank has become concerned about the rapid surge of the yuan

exchange rate in recent weeks. 

     The yuan was last at 6.5043 against the U.S. unit, 0.66% weaker than the

official closing price of 6.4617 on Friday. 

     The People's Bank of China set the yuan central parity rate against the

U.S. dollar at 6.4997 Monday, compared with Friday's 6.5032. The PBOC has set

the fixing stronger for 11 consecutive trading days, and today's fixing was the

highest since May 12 last year.

     Money market rates were mixed on Monday morning after the PBOC drained a

net CNY40 billion via open-market operations for the day.

     The seven-day repo average was last at 2.7414%, lower than Friday's average

of 2.8282%. The overnight repo average was at 2.6027%, higher than Friday's

2.5970%.

     The yield on benchmark 10-year China government bonds was last at 3.5709%,

down from the previous close of 3.5780%, according to Wind, a financial data

provider. 

     Stocks were up, led higher by the new-energy automobile sector. The

benchmark Shanghai Composite Index was 0.36% higher at 3,377.23. Hong Kong's

Hang Seng Index was up 0.96% at 27,932.93.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,M$$FI$,MN$FI$,MN$FX$]