MNI China Press Digest Oct 28: FX, Growth, Yuan Globalisation

The following lists highlights from Chinese press reports on Friday:

• The yuan will continue to fluctuate both ways instead of continuing its recent sharp depreciation as it is supported by China’s pro-growth policies, current account surplus, and sufficient counter-cyclical tools, said the 21st Century Business Herald in a commentary. The growing expectation for a dovish turn by the Federal Reserve and European Central Bank amid increasing fears of recessions could weaken the U.S. Dollar Index and ease some depreciation pressure on yuan against the dollar, the newspaper said. There are plenty of regulatory tools the People’s Bank of China can use, such as continuing to lower the foreign exchange deposit reserve ratio and implementing its counter-cyclical factor, to ensure the yuan fluctuates within a reasonable range, the newspaper said.
• China will focus on the implementation of pro-growth policies, stabilise employment and prices, and strive to promote better economic performance in Q4 than in Q3, Xinhua News Agency reported citing a State Council executive meeting chaired by Premier Li Keqiang. It is necessary to accelerate construction and funds should be redirected to new projects if construction fails to start on time, the meeting said. The issuance of loans for manufacturers to upgrade equipment should be quickened to expand demand, the meeting said. City-specific policies should support the purchase of first and second homes, the meeting added.
• The global status of yuan has steadily improved in terms of receipts and payments, and reserves, and foreign investors have increased their holdings of yuan bonds for the eighth consecutive year, Securities Daily reported citing a report by China Banking Association. To quicken yuan internationalisation, regulators should seek to expand the scale of bilateral currency swaps and promote the unification of policy standards for using domestic and foreign currencies in trade and investment, the report said. Widening the scope of participants in cross-border investment in China's financial markets, more active development of the offshore yuan market, and optimising the offshore yuan clearing system was also recommended.