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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI China Daily Summary: Thursday, September 15
POLICY: Industrial production, fixed asset investment and retail sales data are expected to show China’s growth stabilised in August despite renewed Covid-19 outbreaks and power rationing triggered by the worst heatwave in decades, analysts said.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY2 billion via 7-day reverse repos and CNY400 billion in 1-year medium-term lending facilities with the rate unchanged at 2.00% and 2.75%, respectively. The operation led to a net drain of CNY200 billion after offsetting the maturity of CNY2 billion of repos and CNY600 billion of MLFs 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 1.5116% from 1.5113% on Wednesday, Wind Information showed. The overnight repo average increased to 1.2243% from the previous 1.1666%.
YUAN: The currency weakened to 6.9775 against the dollar from 6.9630 on Wednesday. The PBOC set the dollar-yuan central parity rate lower at 6.9101, compared with 6.9116 set on Wednesday.
BONDS: The yield on 10-year China Government Bond was last at 2.6615%, down from Wednesday's close of 2.6640%, according to Wind Information.
STOCKS: The Shanghai Composite Index fell 1.16% to 3,199.92, while the CSI300 index lost 0.94% to 4,027.12. The Hang Seng Index gained 0.44% to 18,930.38.
FROM THE PRESS: Several Chinese major state-owned banks have lowered their personal deposit interest rates since September 15, following cuts in the benchmark Loan Prime Rates in August, the Securities Times reported citing unnamed sources. The interest rates on three-year term deposits and large-denomination certificates of deposit were lowered by 15 bps. Major banks last lowered their deposit interest rates in late April, after the central bank established a market-based mechanism for deposit interest rates which refers to the 10-year treasury bond yield and 1-year LPR.
China will promote equipment upgrades in the manufacturing and social services sectors to expand demand, CCTV News reported following the State Council executive meeting chaired by Premier Li. The government will support banks to provide medium and long-term loans with an interest rate of no higher than 3.2% for manufacturers and social services SMEs to upgrade equipment in Q4. The People’s Bank of China will use a CNY200 billion special relending facility to support the policy, while the central government will offer a 2.5% interest rate discount. In Q4, the actual loan cost for upgrading equipment should be no higher than 0.7%, CCTV said.
China needs to ensure it doesn't increase FX reserves to levels greatly more than needed, as increased reserves affect the independence of monetary policy and holding costs increase with diminishing marginal effect, wrote Guan Tao, a former official at the State Administration of Foreign Exchange in a blog post. The blog post was in response to recent market discussions of whether China has sufficient reserves. Increased yuan flexibility, a larger basic surplus, more private sector foreign exchange holdings, the central bank’s macro-prudential management, and FX policy adjustments constitute the "five layers of protection" to maintain the stability of China's FX market, which will reduce dependence on FX reserves, wrote Guan.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.