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LPR: China's central bank left its benchmark rate for loans unchanged for the 14th straight month Monday, even after the factory gate price jumped to a 13-year high. The Loan Prime Rate, guiding companies' cost of borrowing, remains at 3.85% for the one-year maturity and 4.65% for five years. The move was expected as the PBOC had left the Medium-term Lending Facility rate at 2.95% on June 15.
POLICY: China sees a greater need for coordinated economic policies among G20 countries to deal with the expected increase in financial volatilities as the Federal Reserve pivots toward tightening, former Vice Minister of Finance Zhu Guangyao said on Sunday. There are signals that the Fed will take immanent measures to end its QE, and the shrinking dollar will create a liquidity crisis that will become a key challenge, Zhu said at a forum held by Ifeng.com.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.2%. This resulted in a net injection of CNY10 billion as no reverse repos maturing today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.2808% from 2.2039% on Friday, Wind Information showed. The overnight repo average increased to 2.2524% from the previous 2.0290%.
YUAN: The currency weakened to 6.4705 against the dollar from 6.4408 on Friday. The PBOC set the dollar-yuan central parity rate higher for a fifth day at 6.4546, compared with the 6.4361 set on Friday, marking the weakest fixing since May 13.
BONDS: The yield on 10-year China Government Bond was last at 3.1175%, down from 3.1425% on Friday, according to Wind Information.
STOCKS: The Shanghai Composite Index edged up 0.12% to 3,529.18 while the CSI300 index lost 0.24% to 5,090.39. Hang Seng Index edged down 1.08% to 28,489.00.
FROM THE PRESS: The PBOC will maintain reasonable and ample liquidity in line with its goal of keeping a stable monetary policy, and analysts should not make unfounded tightening predictions that mislead expectations and cause volatility, the PBOC-run Financial News said in a commentary on Sunday. Though some analysts had predicted a marginally tightening condition in May due to surging tax payments and local government bond issuances, the average DR007 for the month, at 2.12%, was 8 bps lower than the 7-day reverse repo rate, the newspaper said. The PBOC will guide the money market rates around its short-term policy interest rate, the newspaper said.
Chinese banks cut interest rates of large deposit certificates as a new pricing mechanism for lenders' deposits introduced took hold, the Shanghai Securities News reported. Deposits bearing relatively high rates will likely see rates decline, helping reduce banks' costs and ultimately lower their lending rates, the newspaper cited analysts as saying. The new mechanism adds a basis points differential on the benchmark interest rate, differing from the previous that was percentage-based, the newspaper said.
More than 90% of China's Bitcoin mining capacity is estimated to be shut down after authorities in southwest Sichuan province, one of China's largest mining bases, ordered a halt to mining in the region on Friday, the Global Times reported. Regulators in other key mining hubs in China's north and southwest regions have taken similar harsh steps, even as Sichuan had been predicted to be taking a softer approach given its abundant hydropower, the newspaper said. Crypto miners are scrambling to find overseas mines to place their devices and many have suffered huge losses, the newspaper said citing an unidentified industry insider. Sichuan authorities listed 26 potential miners and ordered local electricity companies to screen and terminate these operations, the newspaper said.