MNI CHINA MARKETS: Yuan Rises; Rates Up; SHCOMP Down

     BEIJING (MNI) - The Chinese yuan rose to 6.2820 against the U.S. dollar

from Thursday's 6.2960 closing.  

PBOC set the yuan central parity rate vs the U.S. dollar at 6.2885 on Friday,

stronger than Thursday's 6.3045, marking the first time it broke 6.3000 since

August 2015.  

***COMMENT: The weak dollar and increased tolerance of the PBOC have supported

the surge of the yuan this year. Market sources told MNI that if the U.S dollar

index remains below 90, the yuan would further strengthen this year, and may

even touch the level of 6.1000.  

     Interbank market rates were up Friday, after PBOC drained net CNY90 billion

after refraining from conducting open-market operations. 

 - 7-day repo average last at 2.7344%, higher than 2.7250% yesterday 

 - Overnight repo average 2.5010%, up from 2.4752% yesterday.  

***COMMENT: Liquidity on the interbank market is still loose as the PBOC

conducted contingent reserves allowances. Today was the seventh trading day that

the central bank skipped conducting OMOs, draining CNY1150 billion in total.

     The yield on 10-year China government bonds last traded 3.9075%, up from

3.9000% at Thursday's close: Wind Information 

The Shanghai Composite Index was last 0.41% lower at 3,432.82 in the morning

session, while Hong Kong's Hang Seng Index rose 0.12% to 32,682.47.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI Beijing Bureau; +86-10-8532-5998; email: beijing@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,M$$FI$,MN$FI$,MN$FX$]