MNI China Press Digest, Aug 9: Yuan, Inflation, CBS

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

on Friday:

     The Chinese yuan has a better foundation to stabilize at a balanced level

than it did three years ago when the yuan fell by 2% against the U.S. dollar,

the PBOC-operated Financial News reported. Citing Ma Jun, a member of the PBOC's

Monetary Policy Committee, the report compared the recent yuan depreciation to

that of three years ago, when the PBOC announced a new yuan fixing mechanism.

Compared to the situation in 2015, Ma said slower capital inflows, the greater

value of overseas assets held by Chinese companies and residents, and a more

stable stock market this year have all helped to stabilize the yuan. Most market

players have become accustomed to the two-way fluctuation of the yuan and are

better prepared today for FX risks, said Ma, noting that any increased

short-term fluctuation of the yuan is unlikely to cause panic.

     China should continue to liberalize its exchange rate while strengthening

the monitoring of the FX market to prevent excessive and abnormal currency

fluctuations, Economic Daily reported. Citing Guan Tao, the former director of

the International Payments Department at the State Administration of Foreign

Exchange, the report said market players should be better adapted and tolerant

of two-way fluctuations in the yuan, and focus on China's economic fundamentals.

Guan said radical policy and erratic behaviour from the U.S, as well as frequent

verbal interventions from that country, had created uncertainty and increased

volatility in global markets.

     China's CPI growth is likely to remain below 3% this year without any

inflationary pressure, China Securities Journal said in a front-page commentary.

Keeping prices stable is an important focus of policymakers, the newspaper said,

noting that the government had repeatedly stressed that it would ensure the

supply of daily necessities such as fruit, vegetables, meat and eggs. Food price

gains are unsustainable, the newspaper added.

     The PBOC has conducted the third central bank bills swap (CBS) operation to

support the issuance of perpetual bonds by commercial banks. The CBS, valued at

CNY5 billion, are open to primary dealers at a fixed rate at 0.1%, according to

a statement on the PBOC website. The swap will be due on November 8, 2019, the

statement said. The CBS scheme allows dealers to swap the perpetual bonds they

hold for central bank bills, which will boost market demand for perpetual bonds.

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

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

[TOPICS: M$A$$$,M$Q$$$,MI$$$$]