MNI China Press Digest, Aug 27: LPR, MLF, Yuan

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

on Tuesday:

     PBOC Governor Yi Gang has urged banks to refer to the new LPR pricing for

new lending in a bid to lower real lending rates, according to a statement on

the PBOC website. Yi said banks should break through the implicit lower limit of

loan interest rates, and optimise credit structures to provide financial support

to small private companies, and to firms in the manufacturing and service

sectors. Yi met with 24 major banks on the LPR issue on Monday.

     The PBOC is unlikely to lower the interest rate on the medium-term lending

facility (MLF) to drive down the loan prime rate (LPR) immediately and may delay

until mid-September, China Securities Journal reported. Citing analysts, the

Journal's report said a lower MLF rate would drag market interest rates lower

and would not contribute towards keeping the yuan exchange rate stable in the

short term. Food inflation also restricts the downward adjustment of policy

interest rates, the newspaper added.

     China's yuan exchange rate is likely to keep fluctuating in the short term

but there were no significant factors driving depreciation in the medium and

longer terms, according to a report in the China Securities Journal. Citing

analysts, the Journal report said that the exchange rate could be impacted by

external risks and market sentiment in the short term. China's imports and

exports were relatively stable in the first seven months of 2019 and exports had

been stronger than expected, and these factors meant there were no major risks

in a further long term depreciation of the currency, according to Ming Ming,

chief analyst at CITIC Securities.

--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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