21 Jan 2014
Flash: Chinese economic reform having effect on growth prospects - BTMU
FXstreet.com (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that economic reforms in China are creating a less supportive environment for economic growth in the near term.
Key Quotes
"The foreign exchange market has again remained relatively stable in the Asian trading session. The yen has given back some of its recent gains alongside the improvement in investor risk sentiment following the announcement from the PBoC that it has injected more than CNY255 billion into the financial system to meet Lunar New Year demand for cash."
"The PBoC added funds to large commercial banks yesterday using its Standing Lending Facility (SLF) and conducted CNY255 billion of reverse-repurchase agreements today. The PBoC is also allowing small and medium-sized banks in 10 regions to tap its SLF on a trial basis before the week-long Lunar New Year holiday which starts on the 31st January."
"The seven-day interbank repurchase rate has declined by 0.88 point to 5.44%. Investors continue to remain concerned over the risk of a potential credit crunch in China. Those concerns have been reinforced by reports last week that CNY3.0 billion of mining trust loans underwritten by the China Credit Trust may default or be restructured on the 31st January."
"Economic reforms in China including attempts to dampen credit growth, particularly in the shadow banking sector, and break the implicit government guarantee on debt products are creating a less supportive environment for economic growth in the near-term. The yen is also weakening ahead of tomorrow’s BoJ monetary policy meeting. We expect the BoJ to maintain its current policy stance which is unlikely to have any impact upon yen direction."
Key Quotes
"The foreign exchange market has again remained relatively stable in the Asian trading session. The yen has given back some of its recent gains alongside the improvement in investor risk sentiment following the announcement from the PBoC that it has injected more than CNY255 billion into the financial system to meet Lunar New Year demand for cash."
"The PBoC added funds to large commercial banks yesterday using its Standing Lending Facility (SLF) and conducted CNY255 billion of reverse-repurchase agreements today. The PBoC is also allowing small and medium-sized banks in 10 regions to tap its SLF on a trial basis before the week-long Lunar New Year holiday which starts on the 31st January."
"The seven-day interbank repurchase rate has declined by 0.88 point to 5.44%. Investors continue to remain concerned over the risk of a potential credit crunch in China. Those concerns have been reinforced by reports last week that CNY3.0 billion of mining trust loans underwritten by the China Credit Trust may default or be restructured on the 31st January."
"Economic reforms in China including attempts to dampen credit growth, particularly in the shadow banking sector, and break the implicit government guarantee on debt products are creating a less supportive environment for economic growth in the near-term. The yen is also weakening ahead of tomorrow’s BoJ monetary policy meeting. We expect the BoJ to maintain its current policy stance which is unlikely to have any impact upon yen direction."