Yuan Strengthens Despite PBOC Efforts

The PBOC fixed USD/CNY at 6.4883, in line with sell side estimates and around 38 pips higher than yesterday. The bank also injected CNY 75bn, well above the CNY 5bn injections seen over the past week.

• However a weaker fixing for the yuan and a liquidity injection were not enough to dampen risk sentiment evident in the region, USD/CNH is last down 82 pips at 6.4889.
• Some of the strength could be a delayed reaction to strong GDP and Industrial Production data yesterday, which saw a muted response at the time amid stronger USD narrative. China's GDP grew 6.5% in Q4, the making it the only major economy to expand last year. Industrial production has been at the heart of the recovery, factory output jumped a further 7.1% inQ4, after growing 5.8% in the previous quarter. Retail sales missed expectations, but most of the weakness was concentrated in the first half of the year.
• Also on the wires Guo Shuqing, chairman of the CBIRC, has dismissed claims that China is distorting its economy through state monopoly capitalism, saying the accusations are a big "misunderstanding" of how its economy operates saying state run companies are essential for tax purposes.