VIEW: ING note that "even though the PBOC.....>

CHINA: VIEW: ING note that "even though the PBOC did not change the 7-Day policy

rate, the Shanghai interbank offered rate (Shibor) has fallen quickly, from

4.1550% at the end of June to 3.1740% in July and now 2.8940% in August. We

believe this is a result of the window guidance from the central bank to cushion

the econ. from the damaging effects of the escalating trade war. The PBOC has

shut down capital outflow channels via the Shanghai FTZ & has penalised cases

that violated cross-border fund regulations. It has also managed to support the

yuan by imposing a 20% charge on short yuan positions in forward contracts, and

it restarted the counter-cyclical factor for the daily fixing in August. We

don't believe this implies that the central bank would like the yuan to

appreciate against the dollar even if the dollar strengthens against most

currencies. Instead, we see the counter-cyclical factor as a tool to control the

speed of yuan depreciation, not a tool to change yuan direction. As capital

outflow channels have been almost closed, this gives more room for yuan

depreciation as the worry of massive capital outflows is minimised. We retain

our end-year forecast of USDCNY 7.0."