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MNI China Press Digest July 06: Yuan, LGFVs, CPI

(MNI) Beijing

(MNI) Beijing - Highlights from Chinese press reports on Thursday:

  • The yuan could gradually stabilise or appreciate against the U.S. dollar, should market expectations on the Chinese economy improve and the USD index weakens as the US economy slows, said Ming Ming, chief economist of CITIC Securities. The central bank has plenty of policy tools to deal with large FX fluctuations, including raising the FX risk reserve ratio or the deposit reserve ratio, as well as using central bank bills in the offshore market and restarting countercyclical factors, said analysts from Donghai Securities. The yuan began to rebound this week after approaching the CNY7.3 mark against USD. (Source: Yicai)
  • Several people close to major state-owned banks have denied claims top banks have offered local government financing vehicles (LGFVs) loans with 25-year maturities and temporary interest relief to avoid a credit crunch. The loans were said to wave interest or principal payments for the first four years. (Source: 21st Century Business Herald)
  • China’s National Bureau of Statistics expects June’s CPI data to remain unchanged from May’s 0.2% y/y increase, according to Yicai. The news outlet noted pork prices, a key component of CPI, have dragged down inflation this year as producers increased slaughter due to swine flu and faced lower than expected consumer demand. The NDRC began a new round of pork purchasing to increase national reserves and stabilise prices. Wu Chaoming, deputy director of the Caixin Research Institute, said CPI in June will remain below 1% y/y, reflecting insufficient domestic demand and slow recovery of household income. (Source: Yicai)
MNI Beijing Bureau | lewis.porylo@marketnews.com
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MNI Beijing Bureau | lewis.porylo@marketnews.com
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