MNI CHINA MARKETS: Yuan Weakens Again; Rates Down; Stocks Down

     BEIJING (MNI) - The yuan fell further against the U.S. dollar on Wednesday

morning after the People's Bank of China set a weaker fixing for the day.

     The yuan was last at 6.6170 against the U.S. unit, weaker than the official

closing price of 6.6131 on Tuesday. The yuan opened at 6.6178 on Monday.

     The People's Bank of China set the yuan central parity rate against the

U.S. dollar weaker at 6.6163 on Wednesday, compared with Tuesday's 6.6113. The

PBOC has set the fixing weaker for eight consecutive trading days, with today's

fixing the weakest since Nov. 22.

     The Financial News, a journal run by the PBOC, reported this morning the

central bank will use 28-day reverse repos, or even its Temporary Liquidity

Facility (TLF), to deal with the possible liquidity tightness at year-end and

before the Spring Festival (Chinese New Year). The news will soothe market

sentiment after the PBOC drained a net CNY420 billion via OMOs so far this week.

     Money market rates fell even though the PBOC drained a net CNY160 billion

from the banking system via its open market operations. The seven-day repo

average was last at 2.7040%, lower than Tuesday's average of 2.7868%. The

overnight repo average was at 2.5401%, also lower than Tuesday's 2.5439%.

     The yield on benchmark 10-year China government bonds was last at 3.8700%,

down from the previous close of 3.9000%, according to Wind, a financial data

provider. 

     Stocks fell, dragged down by the real estate sector in the morning session,

with the benchmark Shanghai Composite Index 0.71% lower at 3,3280.70. Hong

Kong's Hang Seng Index was 0.84% lower at 28,599.63.

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

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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