Halister News

(Bloomberg) -- Onshore and offshore yuan diverge as PBOC weakens reference rate 0.29%, most since July 6, after meeting of G-20 finance ministers and central bank governors in Chengdu over weekend.

• CNH falls 0.06% to 6.6865 vs USD; CNY up 0.04% to 6.6775
  • PBOC sets CNY fixing at 6.6860, weakening for first time since last Tuesday
• China will keep improving its FX rate system based on market supply and demand and with reference to basket of currencies: PBOC governor Zhou in G-20 statement
  • Will work hard to stabilize yuan vs basket: PBOC deputy governor
• Zhou’s note at G-20 indicates yuan will depreciate gradually and in orderly manner long term, Citic Securities’ head of fixed income research Ming Ming writes in a note today; China is liberalizing FX regime while avoiding extreme volatility
  • Gradual depreciation will support exports; weaker yuan has stimulated domestic consumption; more investors will sell yuan-denominated assets, which could ease domestic asset bubble
  • But weaker yuan is leading to capital outflow and squeezing domestic liquidity; expects yield of 10-yr govt bond at 2.8% by yr-end
• 10-yr govt bond yield rises 2 bps to 2.81%
• CNY 7-day repo rate falls 9 bps, first decline in a week, to 2.2766%
• PBOC sells 150b yuan of 7-day reverse repo at 2.25%
• USD/CNH support at 6.6683, 6.6661, 6.6528
  • Resistance at 6.7007, 6.7131, 6.7195
• Yuan fails Fed haven currency test ahead of joining IMF reserve basket
• CASS says growth in China house prices may ease in coming months after rapid rise in 1H: China Securities Journal