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EXCLUSIVE: The People's Bank of China (PBOC) may make further reductions to
money market rates or banks' reserve requirement ratios after the first quarter,
as consumer price inflation moderates, policy advisors told MNI. Such moves
would cut financing costs for infrastructure projects key to officials' hopes of
boosting the economy, as well as assist the drive for local governments to lower
debt burdens, said Zhang Ming, senior fellow at the Institute of World Economic
and Politics under Chinese Academy of Social Sciences.
POLICY: China will boost investment this year by building more intercity
and urban railways and highways, undertaking major water conservation projects
and renewing old urban communities and their supporting infrastructure, said
spokeswoman Meng Wei of the National Development and Reform Commission at a
briefing on Sunday.
LIQUIDITY: The PBOC injected CNY250 billion via 14-day reverse repos with
the rate unchanged at 2.65%, according to a statement on the PBOC website. The
move aims to hedge government bond issuance and offset peak cash demand, keeping
reasonable and ample liquidity before the Chinese New Year holiday, PBOC said.
RATES: The seven-day weighted-average interbank repo rate for depository
institutions (DR007) decreased to 2.5708% from Friday's close of 2.5916%, Wind
Information showed. The overnight repo average fell to 2.2271% from Friday's
YUAN: The yuan weakened to 6.8613 against the U.S. dollar from Friday's
close of 6.8585. PBOC set the dollar-yuan central parity rate lower at 6.8664,
compared with 6.8878 on Friday. Today's fixing is the biggest daily rise since
Jan 8, 2020.
BONDS: The yield on 10-year China Government Bond was last at 3.0800%, down
from Friday's close of 3.1075%, according to Wind Information.
STOCKS: The Shanghai Composite Index gained 0.66% at 3,095.79. Hang Seng
Index lost 0.90% to 28,795.91.
FROM THE PRESS: China will continue the policy of cutting fees and taxes
this year, according to a commentary published by Economic Daily. China
implemented the biggest national tax cut campaign in 2019, leading to only 0.5%
increase in tax revenue to CNY14.97 billion, the daily said.
The PBOC may roll over the Targeted Medium-Term Lending Facility (TMLF) set
to mature this Thursday with extra funds, the Securities Times reported citing
Ming Ming, the chief analyst at CITIC Securities. The central bank will continue
to conduct reverse repos before the Chinese New Year, although on a smaller
scale and a CNY1.3 trillion liquidity gap in January remains after the PBOC
injected CNY1.9 trillion, the newspaper cited Ming as saying.
China should stabilize employment, investment and trade to help achieve its
goal of building a well-off society this year, outlined in the 13th Five-Year
Plan, the Economic Information Daily said in a commentary. Macroeconomic
policies should maintain continuity and countercyclical adjustment should be
reinforced against economic downturn, the daily said.
Prices of steel may rise this year given expected economic recovery may
boost demand by 2% while supply won't keep up, the Economic Information Daily
reported citing a forecast from the China Iron and Steel Association.
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