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Free AccessMNI China Daily Summary: Friday, March 22
EXCLUSIVE: The increasingly dovish Federal Reserve will bolster emerging
market currencies, a member of the People's Bank of China's monetary policy
committee told MNI, and a former senior foreign exchange official said the yuan
would rally and the PBOC have more scope to boost China's economy. "I think the
Fed's stance of slowing the pace of rate hikes will help ease the pressure of
capital outflow from emerging markets and improve market confidence in the
stability of their currencies," MPC member Ma Jun said. Separately, Guan Tao,
former Director General of Balance of Payments at the State Administration of
Foreign Exchange, told MNI: "The dovish stance of Fed monetary policy will help
expand the PBOC's policy room and the yuan will see further strength as the
dollar falls in the short term."
DATA: Bankers' Macroeconomic Heat Index recorded 36.4% in Q1, up 2
percentage points from the previous quarter, data released by the PBOC showed.
67.7% of the bankers surveyed considered the economy remains "normal", up 0.9 pp
from last quarter. 29.8% of them thought the economy was cold bias, down 2.5 pp.
The index is expected to grow higher to 39.3% in Q2. While Banker's
Macroeconomic Confidence Index rose 1.6 pp to 70.1% in Q1, the PBOC said.
DATA: 89.7% of the 20,000 residents in 50 cities nationwide thought their
income increased or remained basically the same in Q1, increasing 0.9 pp from
last quarter, according to a survey conducted by the PBOC released on its
website today. While the Income Confidence Index saw a downward trend, declining
0.4 pp to 54%. Meanwhile, less residents, 25.9% are willing to increase buying,
down 2.8 pp. More of them, 45% prefer increasing deposit, up 0.9%. Also, 29.2%
of them prone to do more investment, up 1.9 pp. 21.5% of them plan to purchase
housing in the coming quarter.
LIQUIDITY: The PBOC skipped open market operations for the third day,
resulting in a net drain of CNY20 billion due to the maturity of reverse repos,
according to Wind Information. Total liquidity in the banking system is at a
reasonable and ample level, said the PBOC. The PBOC has injected net CNY90
billion of liquidity via reverse repo this week, Wind Information said.
RATES: The 7-day weighted average interbank repo rate for depository
institutions (DR007) fell to 2.5000% from Thursday's close of 2.6814%, Wind
Information showed. The overnight repo average decreased to 2.3000% from
Thursday's 2.6637%.
YUAN: The yuan weakened to 6.7060 from Thursday's close of 6.6877. The PBOC
set the dollar-yuan central parity rate at 6.6944 today, compared with 6.6850 on
Thursday.
BONDS: The yield on 10-year China Government Bond was last at 3.135%, down
2.5 bps from the close of Thursday, according to brokers.
STOCKS: The benchmark Shanghai Composite Index rose 0.09% to 3,104.15. Hong
Kong's Hang Seng Index increased 0.14% to 29,113.36.
FROM THE PRESS: China's growth rate could continue to fall below the 6 -
6.5% target range as current stimulus measures are short-term and insufficient,
Ming Ming, chief fixed-income analyst at CITIC Securities, wrote in a note on
Friday. A desired economic rebound make take longer and be limited in scope,
Ming said. The PBOC may use price-based monetary policy tools to stabilize the
economy, as a possible downturn in global economy may put pressures back on
risky assets, Ming said.
The disclosure of the schedules of the next two rounds of China-US trade
talks by the Ministry of Commerce (MOFCOM) suggested that the consultations may
be entering the final stage, the Global Times reported. Disclosing the two
schedules at the same time means the result of a single round doesn't impede the
overall process, as one is normally released after another's completion, the
newspaper reported Citing Bai Ming, deputy director of the International Market
Research Institute affiliated with the MOFCOM.
The PBOC should cut the reserve requirement ratio at least three times this
year, the China Securities Journal reported citing Ren Zeping, chief economist
at the Evergrande Research Institute. With RRRs for large banks and small and
medium-sized banks as high as 13.5% and 11.5%, there was an opportunity for
cuts, the newspaper said citing Ren. The PBOC is more likely to cut interest
rates as a result of the Fed's interest rate hike coming to an end and the
Sino-U.S. interest rate spread expanding, along with an easing both in the
depreciation pressure on the yuan and trade tensions, Ren was reported as
saying.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]
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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.