MNI China Press Digest, Aug 20: RRR, Stronger Yuan

The PBOC is unlikely to cut banks' reserve requirement ratios in the short term and will maintain liquidity mainly through reverse repos and MLFs, said the China Securities Journal in a front-page commentary. The PBOC would ensure sufficient money to help enterprises resume production and stabilise the recovery, while emphasising moderate liquidity and market entities' direct access to liquidity, the newspaper said.

The yuan is expected to further appreciate against the U.S. dollar this year, supported by the steady recovery of the Chinese economy, relatively low valuations of yuan assets and a weakening dollar, the China Securities Journal reported citing analysts. Yuan internationalisation faces new opportunities as foreign investors reduce the proportion of their holdings of U.S. debt to the lowest level since 2008, the newspaper said. The large expansion of the U.S. Fed's balance sheet and surging U.S. debt following the pandemic continue to weaken the dollar, the newspaper said.