MNI China Press Digest, Aug 12: Yuan, Interest Rate Cut, LPR

     BEIJING (MNI) - The following lists highlights from Chinese press reports

on Monday:

     Allowing the yuan exchange rate to break through the psychologically

important level of 7 against the U.S. dollar sends a clear signal that currency

fluctuation is not a decisive factor in China's monetary policy, China

Securities Journal said in a front-page report. It is less likely that China

will adjust its monetary policy now that the yuan has released some depreciation

pressure, and while the bond spreads between China and other countries remain

large, the newspaper said.

     It is unnecessary for the PBOC to follow interest rate cuts by other

central banks because its monetary policy was focused on the domestic economy,

according to a report in the Securities Daily. Citing interviews with analysts,

the report said that it is more likely the PBOC will selectively reduce the

reserve requirement ratio than cut rates.

     China is expected to gradually replace the lending benchmark interest rate

with the Loan Prime Rate (LPR), China Securities Journal reported citing

analysts. The comments followed the PBOC's Q2 monetary policy report which said

that the LPR should play a leading role in the formation of real interest rates.

This requires the LPR mechanism to be further improved, and hence the one-year

LPR is likely to edge down in the near term after stabilizing at 4.31% for more

than 16 months, the newspaper said.

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

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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