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POLICY: China will push local governments to issue all of their special bond allocations by the end of November and will further implement tax and fee cuts to keep the economy at "a reasonable range", officials of the Ministry of Finance told reporters on Friday in a briefing.
POLICY: The Chinese yuan will remain basically stable depending on domestic and foreign economic conditions, international balance of payments, and changes in the global FX market, said Wang Chunying, spokeswoman of the State Administration of Foreign Exchange at a briefing. An appreciation of the yuan against the U.S. dollar this week was normal and driven by market forces, mainly due to a decline in the U.S. dollar index amid news of the Fed's shrinking balance sheet and rising expectations of rate hikes by major economies, said Wang.
POLICY: China will encourage yuan settlement with neighboring countries, promote the pricing and settlement of commodity trading in yuan and support the use of yuan in RCEP and the construction of overseas industrial parks, said Zhou Yongkun, deputy director of the Macroprudential Department of the People's Bank of China during the Financial Street Forum.
LIQUIDITY: The PBOC injected CNY100 billion via 7-day reverse repos with the rate unchanged at 2.2%. The operations lead to a net injection of CNY90 billion after offsetting the maturity of CNY10 billion reverse repos today, according to Wind Information. The operation aims to offset the impact of tax season and the issuance of government bonds, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) edged down to 1.9823% from the close of 2.0266% on Thursday, Wind Information showed. The overnight repo average decreased to 1.6653% from the previous 1.6707%.
YUAN: The currency strengthened to 6.3903 against the dollar from 6.3988 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 6.4032, compared with the 6.3890 set on Thursday.
BONDS: The yield on the 10-year China Government Bond was last at 3.0350%, up from Thursday's close at 3.0150%, according to Wind Information.
STOCKS: The Shanghai Composite Index fell 0.34% to 3,582.60, while the CSI300 gained 0.64% to 4,959.73. Hong Kong Hang Seng Index edged up 0.42% to 26,126.93.
FROM THE PRESS: The PBOC should consider cutting RRRs by another 0.5% to release lower-cost market liquidity, lower real interest rate and promote credit growth in the future, the 21st Century Business Herald reported citing Lian Ping, chairman of China Chief Economist Forum. He noted that the current weighted average level of the RRR is close to 9%, leaving room for another cut following the 0.5% reduction in July. The central bank should also roll over the MLFs maturing in Q4, and lower the real market interest rate by 15-25 bps by unleashing the potential of LPR reform, Lian was cited as saying. Monetary policy should be appropriately looser amid weak demand and slowing economic growth, said Lian, adding that the spillover effect of possible monetary tightening by the Fed is controllable by China.
China's credit supply for residential housing is expected to rebound steadily in Q4, as the real estate credit environment is improving with mortgage interest rates in 90 cities in China falling in October from September by 1 bp, Yicai.com reported citing a report by Beike Research Institute. The average interest rate for first-time buyers in 90 cities was 5.73% while that for second-time buyers was 5.99%, both lowered by 1 bp from the previous month. Though a major easing is unlikely, recent comments by top policymakers indicate that the tightest moment of credit supply has passed, as the credit tightening since Q2 has led to sharp declines in home sales, land sales and many overseas debt defaults by developers, the newspaper said.
China needs not to give the incoming U.S. Ambassador to China Nicolas Burns any other courtesies except diplomatic etiquette, given his "toughest and most arrogant" confirmation hearing statements toward China in the Senate on Wednesday, the Global Times said. Burns will inevitably suffer from setbacks after he comes to China, and the U.S. lacks the means to pressure China to submit, the state-run newspaper said. Burns's systematic attack on China, including criticizing its Xinjiang and Hong Kong policies and willingness to sell more arms to Taiwan, demonstrated the U.S. political elites' overall hostility toward China, the Times said. However, Burns's statements seemed hollow as he didn't suggest new moves for the U.S. to deal with China, said the newspaper.