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PBOC: China's central bank on Wednesday left its benchmark rates for loans unchanged, according to a statement on the People's Bank of China (PBOC) website. The move was expected by some market analysts after the PBOC cut the reserve requirement ratio and left unchanged another key policy rate last week. The Loan Prime Rate, guiding companies' cost of borrowing, remains at 3.70% for the one-year maturity and 4.60% for five years.
LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.1% on Wednesday. This keeps the liquidity unchanged after offsetting the maturity of CNY10 billion repos 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) increased to 1.7857% from the close of 1.7357% on Tuesday, Wind Information showed. The overnight repo average rose to 1.3028% from the previous 1.2947%.
YUAN: The currency weakened to 6.4153 against the dollar from 6.3778 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 6.3996, compared with 6.3720 set on Tuesday.
BONDS: The yield on the 10-year China Government Bond was last at 2.8575%, up from Tuesday's close of 2.8475%, according to Wind Information.
STOCKS: The Shanghai Composite Index lost 1.35% at 3,151.05, while the CSI300 index tumbled 1.55% to 4,070.79. Hang Seng Index fell 0.40% to 20,944.67.
FROM THE PRESS: The PBOC move to transfer over CNY1 trillion in profits to the central government is equivalent to releasing the same amount of base currency, which will better spur the economic growth than a cut to reserve requirement ratio, the Economic Daily reported citing Wang Yiming, a member of the PBOC’s Monetary Policy Committee. An RRR cut will increase available funds of commercial banks but may not necessarily lead to credit expansion, while profits transferred by the PBOC will become increased fiscal spending to help companies and residents, effectively boosting demand, the newspaper said citing Wang. As of mid-April, CNY600 billion in profits has been turned in to fund tax rebates and transfer payments to local governments, which is basically the same as a 25 bp RRR cut, the newspaper said.
Shanghai should first resume its manufacturing production, followed by the related sectors and service industry, and accelerate cleaning up its ports with a large backlog of goods, Yicai.com reported citing Zong Chuanhong, secretary-general of the Yangtze River Delta and Yangtze River Economic Belt Research Center. Shanghai's neighboring provinces including Jiangsu and Anhui should coordinate to help smoothen the transportation of core components and key raw materials for automakers and semiconductor companies in Shanghai, helping them obtain transport passes, the newspaper said.
China has refunded CNY420 billion of taxes mainly to small and micro companies in the first half of April, about 30% of the total CNY1.5 trillion planned for this year, as the government acts to mitigate the impact of the epidemic and stabilize the economy, the China Securities Journal reported. Companies mainly use the rebate funds for expanding reproduction, technology R&D as well as purchases of raw materials, the newspaper said.
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