MNI POLICY: China Yuan Stable, Rangebound in H1: FX Official

     BEIJING (MNI) - The Yuan's level was relatively stable in the first half of

2020, fluctuating within a normal band against the U.S. dollar, said an official

with foreign exchange regulator Friday. 

     The yuan's high against dollar was just 4.4% higher than the low in

Jan-Jun, reflecting the stability, said Wang Chunying, a spokesperson with the

State Administration of Foreign Exchange, adding that the yuan ended the half

1.5% lower. 

     The still unpublished current account data is expected to show a Q2

surplus, reversing from the USD33.7 billion defecit in Q1, with China trade

balances showing a surplus in Q2, Wang said at the press conference. She also

predicted that Q2's surplus will be large enough to cover Q1's deficit, leading

to an overall surplus for H1. 

     Foreign investors increased investments into China's domestic bonds and

stocks, with net purchases of USD72.9 billion in H1, though foreign money only

accounts for 2% to 4% of bond market and stock market size. 

     --FX SALES

     Banks sold a net CNY21.7 billion equivalent FX on behalf of clients in

June, reversing the net purchase of CNY142.9 billion in May, indicating FX

outflows accelerated. Greater net sales correspond to larger FX outflows.

     Banks' net sales of FX forward contracts totalled CNY38.2 billion, compared

with CNY54.1 billion in May.

     Banks' net FX purchasing, including both transactions with clients' and

banks' proprietary trading, totalled CNY6 billion in June, decelerating from

May's CNY169.3 billion. The net purchase of FX totalled CNY553.1 billion in H1.

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

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$Q$$$]