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LIQUIDITY: The People's Bank of China injected a net of CNY50 billion via 7-day reverse repos with the rate unchanged on Tuesday as no repos matured today, according to Wind Information. The move aimed to maintain the liquidity in the banking system at a reasonable and ample level, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.2444% from Monday's close of 2.1949%, Wind Information showed. The overnight repo average increased to 2.1920% from 2.1362% on Monday.

YUAN: The currency strengthened to 6.9519 against the dollar from Monday's close of 6.9701. The PBOC set the dollar-yuan central parity rate higher at 6.9711, compared with Monday's 6.9649.

BONDS: The yield on 10-year China Government Bonds was last at 2.9500%, down from Monday's close of 2.9575%, according to Wind Information.

STOCKS: The PBOC is satisfied with current money market rates for moving closer to short-term and medium-term policy rates, Financial News reported citing Li Chao, the chief economist with Zheshang Securities. The central bank said in its Q2 report that it would guide the market rates towards policy rates. The report also suggested the central bank would prioritise sustainable growth, and that future monetary policies would be prudential and normal, the newspaper quoted Chen Jianheng, the chief fixed-income analyst with China International Capital Corporation.

China's commercial banks made combined profits of CNY1 trillion in H1, down 9.4% y/y due to rising costs from recognising and disposing of non-performing loans and greater loan provisions, the Security Times reported on Tuesday citing analysis by the China Banking and Insurance Regulatory Commission. Regulators have reminded banks to redirect the limited profits on capital replenishment to increase their risk-resistance, the newspaper said. The central bank is likely to maintain its policy rate and LPR while continuing to cut the lending rate to further support the real economy, moves which will further reduce banks' net interest margins in Q3, the newspaper reported citing Wen Bin, a researcher from CMSB.

Chinese businesses recruited 4.41 million people in Q2, down 795,000 from the previous quarter, while the number of people still looking for jobs rose 91,000 from Q1 to 3.37 million, the People's Daily reported citing data from the Ministry of Human Resources and Social Securities. The Daily's report quoted Ding Dajian, an analyst with China Labour Research, who said the export sector had downsized its demand for labour due to the weakened global economy. As the pandemic eased in China, more people returned to the labor market in Q2, Ding said. Government data showed strong demand for workers in marketing, food catering and delivery, the Daily reported.

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

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