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MNI Daily Summary: Tuesday, March 16


LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with rates unchanged at 2.2% on Tuesday. 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 2.2198% from Monday's close of 2.2957%, Wind Information showed. The overnight repo average fell to 2.1168% from 2.2238% on Monday.

YUAN: The currency strengthened to 6.4995 against the dollar from Monday's close of 6.5031. The PBOC set the dollar-yuan central parity rate higher for a second day at 6.5029, compared with the 6.5010 set on Monday.

BONDS: The yield on 10-year China Government Bonds was last at 3.2975%, down from Monday's close of 3.3080%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.78% to 3,446.73, while the CSI300 index rose 0.87% to 5,079.36. The Hong Kong's Hang Seng Index increased 0.67% to 29,027.69.

FROM THE PRESS: Liquidity in China's money market in the second half of March is likely to remain plentiful as fiscal expenditure rises, driving rates lower, the Shanghai Securities News reported citing Ming Ming, deputy director of CITIC Securities Research Institute. The PBOC is likely to continue to prioritize stability after injecting CNY100 billion by MLF on March 15, which replaces the same amount of MLF expiring on Tuesday, while leaving rates unchanged at 2.95%, the newspaper said. The MLF rate is likely to remain unchanged in Q2, the report said.

China should include asset prices when considering its inflation levels, as the CPI and PPI may not reflect the whole picture of the economy and the well-being of residents, said Xu Zhong, former director of the Research Bureau of the People's Bank of China in a blog post published by China Finance 40. Higher asset prices and valuations could mean the future investment income of pensions may not be high and more pensions may need to be paid today, Xu said.

China will promote low-carbon energy by curbing the use of fossil fuels, promote carbon emission rights trading and actively develop green finance in the next five years, CCTV News reported citing a meeting of the Central Committee for Financial and Economic Affairs. China will improve policies on taxation, finance, land and government procurement conducive to green development, and promote new green and low-carbon technologies, CCTV said. The moves are part of government plans to reach peak carbon emissions by 2030 and achieve net-zero by 2060.

China will seek to reduce the level of government debt, stabilize macro leverage ratio and urge banks to increase financing to small businesses, according to a statement on following a weekly State Council meeting chaired by Premier Li Keqiang. China will closely monitor the world economy and its impact on China, and coordinate the fiscal and financial policies accordingly to increase employment, stabilize prices, defuse risks and boost economic recovery, according to the statement.

MNI London Bureau | +44 203-865-3812 |
MNI London Bureau | +44 203-865-3812 |

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