MNI CHINA MARKETS: Yuan Weaker; Rates Diverged; SH Shares Down

     BEIJING (MNI) - The Chinese yuan fell to 6.3537 against the U.S. dollar on

Friday from yesterday's 6.3430 closing, despite today's stronger fixing.  

     PBOC set the yuan central parity rate vs the U.S. dollar at 6.3334 today,

stronger than Thursday's 6.3352. PBOC has set the fixing stronger for three

trading days out of five this week.

***As President Trump announced tariffs on imported steel and aluminum

yesterday, the market is closely watching whether they would trigger retaliation

by China. MNI sees no immediate moves as President Xi Jinping's economic deputy

Liu He is in Washington. China will likely remain muted as it holds the biggest

political event of the year, the National People's Congress, through mid-March. 

     Interbank market rates diverged after PBOC injected CNY90 billion, which

resulted in a net drain of CNY20 billion.

- 7-day repo average fell to 2.8726% from 2.8904% yesterday 

- Overnight repo average is up at 2.7582% from 2.6906% yesterday. 

     Yield on 10-year China Government Bond last traded 3.8200%, down from

3.8300% close yesterday: Wind Information.

Stocks retreated, sending the Shanghai Composite Index down 0.35% to 3262.22 at

the 11:20 am, while Hong Kong's Hang Seng Index was last at 30,557.14, down

1.57%.

--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$]