MNI China Press Digest Feb 22: Strong Yuan, Lower LPR, Housing

The following lists highlights from Chinese press reports on Tuesday:

• The yuan may continue its current strength before the Federal Reserve starts its expected rate hikes in March, as the recent Russia-Ukraine conflict increases the demand for alternative yuan assets and China’s economic fundamentals continue to support the currency, the Securities Times reported citing Wang Youxin, senior researcher at Bank of China Research Institute. The cross-border capital flow and the yuan may become more volatile after the Fed Reserve’s March meeting, and companies should not bet on any one-way movement of the currency but make reasonable use of forex derivatives and yuan for settlement, the newspaper cited Wang as saying.
• The People’s Bank of China may further lower the benchmark Loan Prime Rate in March if credit expansion falls short of expectations, the China Securities Journal reported citing Wang Yifeng, chief analyst of Everbright Securities. Though LPR was kept unchanged on Monday after two straight cuts in January and December, the window for easing is still open, the newspaper said. The PBOC may cut the reserve requirement ratios slightly before the expected first rate hike by the Federal Reserve around March 16, pushing the LPR further down, the Journal said citing Wang Yunjin, senior researcher of Zhixin Investment Research Institute.
• Six major state-owned banks in China's southern city Guangzhou cut home mortgage rates by 20 basis points, sending another signal that the authorities are easing to save the real estate markets, reported Quanshang China, a social media account run by the Securities Times. Guangzhou is one of China's so-called tier-one cities considered barometers for policy directions. There is room for further rate cuts as banks have plenty of loan quotas to dole out, the newspaper said citing Yan Yuejing, director of E-house China Research and Development Institution. More smaller cities are expected to reduce down payment ratios or even relax the number of homes they can purchase, the newspaper said citing Sinolink Securities.