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FX OPTION EXPIRY (updated)

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CPI Inflation Rises By 5% In July

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German GDP Rebounded in Q2, But Lower Than Expected

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Italian GDP Beats Expectations On Upside

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The following lists highlights from Chinese press reports on Tuesday:

  • China policymakers see no need to strengthen the yuan to tame rising imported inflation, the 21st Century Business Herald said citing an unnamed domestic economist, who studied remarks over the weekend by the PBOC Deputy Governor Liu Guoqiang aiming to discourage a one-way bet on the Chinese currency. The current commodity price gains may only be short-term, the U.S. Federal Reserve is likely to tighten liquidity, and commodity supplies can increase, the newspaper said. The yuan may not continue to appreciate significantly as other countries catch up to China in terms of restoring their manufacturing, the newspaper said.
  • China should boost domestic supplies of commodities, better coordinate with demand, and strengthen price controls to reduce the costs for producers and exporters, the Economic Information Daily said in a commentary. Global commodity prices have drawn increasing concerns by the central government, said the newspaper owned by the Xinhua News Agency. The rallies and their impacts on PPI may still stay for some time, it said. While rising prices may limit monetary policy room, for now, the central bank isn't likely to tighten, the daily said.
  • The interest rates on 10-year and longer-term Chinese government bonds will likely drop below 3% in the near term and stay slightly over 3% in H2, said China International Capital Corp. The biggest uncertainty facing CGBs is how much local government bonds China will allow to be issued this year, and it's quite possible that financial authorities decide against using the full CNY7.22 trillion quotas approved in March, CICC said.