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POLICY: China's central bank on Monday left its key loan rate unchanged for the 11th straight month as it flags a "policy normalization" stance given the country's record-high debt. The Loan Prime Rate, the benchmark to set companies' cost of borrowing, remains at 3.85% for the one-year maturity and 4.65% for five-years.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with rates unchanged at 2.2% on Monday. This keeps the liquidity unchanged after offsetting the maturity of CNY10 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.1064% from Friday's close of 2.1798%, Wind Information showed. The overnight repo average fell to 2.0433% from 2.1133% on Friday.
YUAN: The currency weakened to 6.5100 against the dollar from Friday's close of 6.5045. The PBOC set the dollar-yuan central parity rate higher for a second day at 6.5191, compared with the 6.5098 set on Friday.
BONDS: The yield on 10-year China Government Bonds was last at 3.2700%, down from Friday's close of 3.2775%, according to Wind Information.
STOCKS: The Shanghai Composite Index increased 1.14% to 3,443.44, while the CSI300 index jumped 1% to 5,057.15. The Hong Kong's Hang Seng Index decreased 0.36% to 28,885.34.
FROM THE PRESS: The People's Bank of China has significant capacity for monetary adjustments as its pursuit of normal policies has left it with appropriate rates and plenty of tools, Governor Yi Gang said on Sunday at the China Development Forum. The central bank will cherish this position of normality and maintain policy continuity, stability and sustainability, Yi said according to an official transcript. China's M2 growth at around 10% y/y is on par with nominal GDP growth, Yi said. The PBOC plans to set up re-lending programs to encourage financial institutions to invest in green assets, Yi said. China also aims to publish a green assets standard in consultation with the EU at the end of this year, he added.
China's appointments of two new monetary policy advisors may reflect an emphasis on job creation , the Shanghai Securities News reports. Cai Fang, a researcher at the Chinese Academy of Social Sciences, is a specialist on population and labor. Wang Yiming, a specialist on macro policies, is the vice chairman at China Center for International Economic Exchanges. The pair replaced Ma Jun and Liu Wei, the State Council said last week.
U.S. traditional allies are not likely to join Washington's efforts to forge a multilateral push to contain China as they cannot resist a "huge and dynamic market" with 1.4 billion consumers, said the state-run Global Times in an editorial. Even Australia, bruised in a tussle with Beijing, is seeking to repair frosty trade relations with China, the newspaper said. The Biden administration's actions showed a continuation of the previous administration's anti-China policy, the newspaper said.