MNI China Daily Summary: Monday, September 23

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY20 billion via

7-day reverse repos as well as CNY80 billion via 14-day reverse repos on Monday.

This resulted in a net injection of CNY100 billion as no reverse repos matured

today, according to Wind Information.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007) fell to 2.7385% from Friday's close of 2.7994%, Wind

Information showed. The overnight repo average decreased to 2.7613% from

Friday's 2.7712%. 

     YUAN: The yuan lost 0.53% to 7.1280 against the dollar at 17:02 local time

from Friday's close of 7.0901, the largest daily loss in nearly a month. The

PBOC set the dollar-yuan central parity rate higher at 7.0734, compared with

7.0730 on Friday.

     BONDS: The yield on 10-year China Government Bonds was last at 3.0975%,

flat from the close of Thursday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index decreased 0.98% to 2,977.08. Hong

Kong's Hang Seng Index edged down 0.81% to 26,222.40.

     FROM THE PRESS: The PBOC will not change its prudential monetary policy

even though it has lowered the reserve requirement ratio (RRR), said the

PBOC-run newspaper Financial News in a commentary. The RRR cut has reduced costs

for financial institutions and increased market liquidity, the newspaper said.

The PBOC will focus on improving the transmission mechanism of monetary policy

so that enterprises can benefit from the injection of liquidity, according to

Financial News.

     Liquidity in China's inter-bank market is expected to recover in the first

half of October on higher fiscal spending, the China Securities Journal said in

a commentary. Demand for tax payments and regulatory supervision at the end of

September made banks less willing to lend and boosted lending costs, the

newspaper said. Considerable liquidity had been released by the recent RRR cut,

the renewal of MLF and the injection of reverse repos, it said.

     China and the U.S. should seek a broad consensus to break the current

deadlock, the People's Daily said in a commentary on its WeChat account on

Saturday. The commentary, which came after the U.S. granted tariff exemptions to

over 400 Chinese goods, said the two countries needed to move forward with

respect for each other's differences. China will not make concessions on its

core interests, which is a position supported by the resilience shown by the

Chinese economy in the past year and future prospect, the daily said.

--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

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