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POLICY: China and the U.S. have agreed to remove tariffs imposed from the
start of the current trade dispute in a phased approach, Chinese Ministry of
Commerce spokesman Gao Feng said at a briefing on Thursday. A phase-one deal is
conditional on the removal of some tariffs proportionate to the scope of the
agreement, he said.
DATA: China's October FX reserves rose for the third month to $3.1052
trillion, up from $3.0924 trillion in September, data released by the State
Administration of Foreign Exchange (SAFE) showed. The increase was mainly due to
exchange rate and asset price fluctuations given the declining dollar index and
falling prices of major government bonds, according to SAFE. The yuan gain 1.44%
against the U.S. dollar in October, Wind data showed.
LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
for the second day, leaving liquidity unchanged, according to Wind Information.
The total liquidity in the banking system is relatively high, PBOC said.
RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) increased to 2.4557% from Wednesday's close of 2.3639%,
Wind Information showed. The overnight repo average rose to 1.9025% from
YUAN: The yuan strengthened to 6.9880 against the dollar from Wednesday's
close of 6.9987. PBOC set the dollar-yuan central parity rate stronger for a
second day at 7.0008, compared with Wednesday's 7.0080.
YUAN: Chinese regulators should continue to relax restrictions to promote
the internationalization of the yuan, China Business News reported citing Huo
Yingli, the director of macro-prudential management bureau at PBOC. The central
bank has shortened the time needed for foreign investors to enter the Chinese
market, improved policy transparency, clarified tax payment arrangements and
introduced overseas rating agencies, said Huo.
BONDS: The yield on 10-year China Government Bond was last at 3.2675%, up
from the close of 3.2500% on Wednesday, according to Wind Information.
STOCKS: The benchmark Shanghai Composite Index was little changed from
yesterday, closing at 2,978.71. Blockchain and pork shares traded actively,
while defence and rare earth stocks showed weakness. Hong Kong's Hang Seng Index
edged up 0.57% to 27,847.23.
FROM THE PRESS: China's yuan internationalization will play an important
role in the development of Free Trade Zones, China Securities Journal reported
citing Chen Yulu, a deputy governor of PBOC. The internationalization of the
yuan will insist on serving the real economy and facilitating trade and
investment, and the currency was an independent choice for market participants,
China should further reform small and medium-sized banks to enhance their
contribution to the real economy, the Securities Times reported citing a meeting
of the State Council Financial Stability and Development Committee on Wednesday.
The current focus is to support small banks replenishing capital, optimizing
capital structure and improving risk management, the newspaper said citing the
China's successful sale of EUR4 billion sovereign bonds in Paris on Nov 5
showed the world's confidence in China's economic prospect, Xinhua News Agency
said in a commentary. The euro bond sale, China's first in 15 years, showed that
investors consider China a valuable market amid global slowdown and its
financial products are safe investment, Xinhua said.
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