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

     BEIJING (MNI) - The Chinese yuan climbed to 6.3387 against the U.S. dollar

on Friday from yesterday's 6.3605 closing, following today's stronger fixing.  

     PBOC set the yuan central parity rate vs the U.S. dollar at 6.3482 on

Friday, stronger than Thursday's 6.3530.

  ***COMMENT: The market expects the yuan to maintain stability and to fluctuate

both ways this year, based on recent signals from the government. It also

expects China to be more confident about reducing intervention in the foreign

exchange market. However, rebound of the dollar is placing headwinds on the

yuan, especially when the U.S. economy shows strong growth momentum.  

     Interbank market rates dipped after PBOC net injected CNY230 billion via

open-market operation.

  - 7-day repo average last at 2.8239%, lower than 2.8897% yesterday 

  - Overnight repo average 2.5645%, down from 2.6066% yesterday.  

     Yield on 10-year China government bonds last traded 3.9375%.  

The Shanghai Composite Index rose 0.2% to 3275.01 at 11:10 a.m., while Hong

Kong's Hang Seng Index was last at 31,261.00, up 0.95.

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

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

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