MNI CHINA MARKETS: Yuan Unchanged; Rates Fall; SHCOMP Down

     BEIJING (MNI) - The Chinese yuan was unchanged at 6.2920 against the U.S.

dollar, same as Wednesday's 6.2920 closing.  

The PBOC set the yuan central parity rate vs the U.S. dollar at 6.3045 on

Thursday, much stronger than Wednesday's 6.3339. Today's fixing surge marks the

second biggest rise so far in 2018, and the highest parity since Aug 11, 2015.  

***COMMENT: The yuan rose 3.38 percentage points against the U.S dollar in

January - the biggest monthly appreciation since 1994, when China ended the

fixed exchange rate system. Market sources told MNI that the PBOC is likely to

take action if the yuan's sharp appreciation continues, particularly against the

basket currencies.  

     Interbank market rates fell Thursday, even though PBOC drained net CNY80

billion after refraining from conducting open-market operations. 

 - 7-day repo average last at 2.7093%, lower than 2.8463% yesterday 

 - Overnight repo average 2.4857%, down from 2.5771% yesterday.  

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

contingent reserves allowances. Today was the sixth trading day that the central

bank skipped conducting OMOs, draining CNY1060 billion in total.

     The yield on 10-year China government bonds last traded 3.9025%, down from

3.9125% at Wednesday's close: Wind Information 

The Shanghai Composite Index was last 1.11% lower at 3,442.21 in the morning

session, while Hong Kong's Hang Seng Index fell 0.19% to 32,824.62.

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

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

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

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