MNI CHINA MARKETS: Yuan Stronger; Rates Lower; SH Shares Up

     BEIJING (MNI) - The Chinese yuan climbed to 6.3317 against the U.S. dollar

on Friday from yesterday's 6.3350 closing, following today's stronger fixing.  

     PBOC set the yuan central parity rate vs the U.S. dollar at 6.3436 on

Friday, much stronger than Thursday's 6.3916. PBOC has set the fixing stronger

for the week starting on Jan 22, which helped the fixing gain almost 1.15%

against the greenback. Today's fixing marks the highest since Nov 5, 2015.

***COMMENT: The yuan's gain on the dollar is expected to pause because the

dollar index may recover in the short term, Li Zhendong, FX analyst with Luzheng

Futures, told MNI. 

 - Li said the ECB indicated in its meeting yday it won't raise rate, thus euro

may be unsupported this year, lending to the dollar index's gain. 

 - Dollar index, EU, Japan's QE policy and China's economy decide the yuan.

     Interbank market rates dipped after PBOC chose not to conduct open-market

operation, which resulted in a net drain of CNY120 billion.

  - 7-day repo average last at 2.7853%, lower than 2.9064% yesterday 

  - Overnight repo average 2.5189%, down from 2.5394% yesterday. 

     Yield on 10-year China government bonds last traded 3.9300%, down from

3.9375% close yesterday: Wind Information.

The Shanghai Composite Index rose 0.46% to 3564.63 at the 11:30 midday market

break, while Hang Seng Index was last at 33,067.80, up 1.27%.

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

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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