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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI China Daily Summary: Wednesday, February 16
POLICY: The People’s Bank of China may cut reserve requirement ratios before an expected Federal Reserve rate hike in March further crimps its policy space, and is likely to be increasingly cautious about pushing forward with an easing cycle as it watches to see whether credit demand improves in response to past stimulus, policy advisors and economists told MNI.
BRIEF: China's economic growth is going to return to its potential rate this year and the central bank will keep its policy appropriate and supportive, said Yi Gang, governor of the People’s Bank of China, on Wednesday. “We will keep our accommodative monetary policy flexible and appropriate, and increase support for key areas and weak links in the economy,” Yi said online to a G-20 finance meeting in Jakarta.
BRIEF: The monetary policy divergence between China and U.S central banks could help stabilise the yuan against the dollar, said Guan Tao, former PBOC official, in an article published in Shanghai Securities News on Wednesday. Guan, former Director General of Balance of Payments at the State Administration of Foreign Exchange, said the yuan is supported by a huge trade surplus, but has deviated from economic fundamentals and a likely Fed rate hike in March could reduce capital inflows and narrow the trade gap.
DATA: China's January consumer price index slowed to 0.9% y/y from last 1.5% growth in December, with food decreasing 3.8% from year earlier, but the monthly gain edged up to 0.4% due to the strong demand ahead of the Chinese New Year, data from the National Bureau of Statistics on Wednesday showed. The producer price index measuring factory gate prices further eased for the third month to 9.1% y/y from December's 10.3% y/y. On a monthly basis, PPI decreased 0.2%, the second monthly fall following last 1.2% m/m drop.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rates unchanged at 2.10% on Wednesday. The operation has led to a net drain of CNY10 billion after offsetting the maturity of CNY20 billion repos today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.0296% from the close of 1.9721% on Tuesday, Wind Information showed. The overnight repo average rose to 1.9326% from the previous 1.8037%.
YUAN: The currency strengthened to 6.3353 against the dollar from 6.3475 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 6.3463, compared with 6.3605 set on Tuesday.
BONDS: The yield on the 10-year China Government Bond was last at 2.7935%, up from 2.7903% of Tuesday's close, according to Wind Information.
STOCKS: The Shanghai Composite Index gained 0.57% to 3,465.83, while the CSI300 rose 0.39% to 4,617.99. The Hong Kong's Hang Seng Index increased 1.49% to 24,718.90.
FROM THE PRESS: The People’s Bank of China is likely to pause the pace of easing by maintaining its loan prime rate, the Securities Daily reported citing analyst Wang Qing of Golden Credit Rating. LPR is updated on the 20th of each month. The central bank signaled its stable policy intention yesterday by leaving unchanged the rate of renewing both MLF and 7-day reverse repo, the newspaper said citing analyst. China may still conduct marginal easing given its controllable inflation, depending on how the economy and the property market perform, Wang was cited as saying.
China’s Q1 infrastructure investment may rise by 8% from a year ago given strong fiscal policies backed by CNY1.79 trillion early-issued local government bonds, Yicai.com reported citing researchers. China’s infrastructure investment grew by only 0.4% in 2021, down from 3.8% registered before the pandemic. If China sets a 5.5% growth target this year, infrastructure spending needs to be at least 5.4% higher, Yicai said citing Sheng Songcheng, a former PBOC official. Many local governments have announced their significant projects mainly in transportation and energy, while 5G and data centers are also expected to receive a boost, Yicai said.China will continue to guarantee sufficient supply and stabilize the prices of commodities to ease the increasing costs on the downstream business sectors, the State Council said in a meeting on Tuesday chaired by Premier Li Keqiang, according to a readout by Xinhua News Agency. As industries, especially services, face a fragile recovery from the pandemic, the government will continue to reduce fees and taxes for businesses and boost lending to SMEs and financing to manufacturing, the government said.To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.