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EXCLUSIVE: The People's Bank of China (PBOC) may increase issuance of
offshore bills as well as further diversify their maturities to better manage
the offshore forex market, promote internationalisation of the yuan and guide
offshore interest rates, former PBOC officials and government advisors told MNI.
Sheng Songcheng, former director of PBOC's statistics department, said that a
greater variety of maturities and more issuance would transform the bills into a
regular tool for PBOC as it seeks to adjust offshore liquidity.
TRADE: China's leading trade negotiator Vice Premier Liu He had a
"constructive discussion" over core concerns of the phase-one agreement with
U.S. Trade Representative Robert Lighthizer and Secretary of Treasury Steven
Mnuchin by phone Saturday, and both sides agreed to maintain close
communication, Xinhua News Agency reported. The talk showed both sides are keen
to realize the deal, and the key now is to ensure that the lack of a deadline
for signing an agreement does not become an excuse for taking their eyes off the
ball, the China Daily said in a commentary.
LIQUIDITY: PBOC lowered the seven-day reverse repo rate to 2.5% from 2.55%,
according to a statement on its website. This was the first cut to the 7-day
interbank rate since the 10 bps cut on Oct 27, 2015, according to data from Wind
Information. PBOC injected CNY180 billion liquidity for the day, according to
RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 2.7418% from Friday's close of 2.7811%, Wind
Information showed. The overnight repo average fell to 2.7015% from Friday's
YUAN: The yuan weakened to 7.0122 against the U.S. dollar from Friday's
close of 7.0121. PBOC set the dollar-yuan central parity rate lower for the
first time in five days at 7.0037, compared with Friday's 7.0091.
BONDS: The yield on 10-year China Government Bond was last at 3.1875%, down
from Friday's close of 3.2275%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged up 0.62% to 2,909.20, helped by
PBOC's policy rate cut this morning. Hang Seng Index rallied 1.35% to 26,681.09.
FROM THE PRESS: The shrinking of balance sheet by the PBOC, unlike moves by
its U.S. counterpart, doesn't indicate a tightening bias since reserve
requirement ratio cuts this year boosted liquidity without base money injection,
the Shanghai Securities News said citing Yang Yewei, the chief analyst at
The PBOC will adjust its monetary policy more frequently but on a smaller
scale to stabilize growth and inflation, the Financial News reported citing Dong
Ximiao, the chief analyst at XW Bank. Policy adjustments such as adding
liquidity to smaller banks as well as supporting small businesses, is likely to
be structural in nature, the newspaper said.
Chinese property developers will face increased capital and inventory
pressure amid weaker-than-expected home sales, the newspaper said citing Yan
Yuejin, the director of the E-House Real Estate Research Institute. The PBOC's
Q3 monetary policy report reiterated the principle of not using real estate to
stimulate growth, the newspaper said.
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