MNI EXCLUSIVE: Dovish Fed To Bolster EM FX, PBOC's Ma Jun Says

--Yuan To Rally Against Weak Dollar In Short Term: Former SAFE Official

     BEIJING (MNI) - The increasingly dovish Federal Reserve will bolster

emerging market currencies, a member of the People's Bank of China's monetary

policy committee told MNI, and a former senior foreign exchange official said

the yuan would rally and the PBOC have more scope to boost China's economy.

     "I think the Fed's stance of slowing the pace of rate hikes will help ease

the pressure of capital outflow from emerging markets and improve market

confidence in the stability of their currencies," MPC member Ma Jun said.

     Separately, Guan Tao, former Director General of Balance of Payments at the

State Administration of Foreign Exchange, told MNI: "The dovish stance of Fed

monetary policy will help expand the PBOC's policy room and the yuan will see

further strength as the dollar falls in the short term."

     The Fed signalled on Thursday that it was unlikely to raise interest rates

this year over growth concerns and that it would stop running down its balance

sheet in September.

     The yuan rose sharply on Thursday. USDCNY touched 6.6689 during intraday

trade, the lowest since July 13, 2018, when it reached 6.6449. It closed 121

pips lower at 6.6877 at 4:30 pm Beijing time, compared with Wednesday's official

close of 6.6998.

     The PBOC set daily fixing at 6.6850 this morning, the lowest since last

July, and compared with 6.7101 Wednesday.

     Zhao Qingming, chief economist at China Financial Futures Exchange, said

the yuan will face appreciation pressure against the greenback, but the dollar

index may go up again in the first half of the year, due to and weak

fundamentals in Europe weighing on the euro.

     "I predict the yuan will be volatile, in a range of 6.30 to 6.99 this

year," Zhao noted.

     Asked if the PBOC would further ease policy, Wu Ge, a former official at

the central bank's monetary policy division, told MNI that easing is expected to

continue for now as the economy still faces downside pressure, but that its

extent would depend on the performance of economic indicators, which are likely

to show stabilisation in the second half of the year.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: MAQDS$,MMQPB$,M$A$$$,M$Q$$$,MT$$$$,MX$$$$,MGQ$$$]