Weak Data Helps Yuan Decline; MM Rates Ease

The PBOC fixed USD/CNY at 6.4669, a 10 pips miss against sell side estimates, which brings misses to +42 pips so far in February. USD/CNH is higher, last at 6.4610 - around 50 pips higher than the announcement of the fix. The pair has retreated from session highs at 6.4651.

• Caixin Services PMI was weak, the data (just after the fix) showed the headline index fell to 52.2 from 55.8 in December - denoting the lowest reading since April 2020. The new orders sub-component also fell to the lowest since April 2020. The figure follows weak prints for official and Caixin manufacturing PMI's earlier this week.
• Money market rates have declined again. The overnight repo rate fell to 1.85%, a 39bps decline, matching the lowest levels since the start of liquidity concerns on Jan 15. The rate surged to 3.3433% at the of January, rising above 7-day repo rates and China's 10-year government bond yield in the process.
• Elsewhere there were reports that the Chinese government plans to give subsidies to over 1,000 SME's. The initiative is aimed at supporting the manufacturing sector and enhancing stability and competitiveness.