MNI China Daily Summary: Tuesday, April 22

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY220.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY56 billion after offsetting the maturities of CNY164.5 billion reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.7079% from 1.7080%, Wind Information showed. The overnight repo average fell to 1.7053% from 1.7237%.

YUAN: The currency weakened to 7.3145 against the dollar from the previous 7.2880. The PBOC set the dollar-yuan central parity rate higher at 7.2074, compared with 7.2055 set on Monday. The fixing was estimated at 7.2892 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6500%, down from the close of 1.6700% previously, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index rose by 0.25% to 3,299.76, while the CSI300 index was down 0.02% to 3,783.95. The Hang Seng Index gained 0.78% at 21,562.32.

FROM THE PRESS: The PBOC will likely cut the reserve requirement ratio or the interest rate in Q2, taking into account the changing external environment and domestic housing market and price trends, said Wang Qing, analyst with Golden Credit Rating. The policy interest rate could see a 30 basis point reduction to lower the financing costs of the real economy significantly. However, Ming Ming, chief economist of CITIC Securities believes, given the stock market recovery and depreciation pressure on the yuan, the PBOC will focus on expectation management in the near term and retain policy room to deal with further uncertainty.

The PBOC will make cross-border use of yuan more convenient and improve the efficiency of payment and collection, especially for companies going overseas, according to an action plan jointly released by financial regulators and the Shanghai municipal government on Monday. The PBOC will also encourage commercial banks in Shanghai to expand cross-border credit expansion to lower companies' yuan financing costs and promote yuan-dominated imports and exports, the statement said.

China unveiled a new initiative aimed at expanding pilot programs to open the country's service sector further, which includes 155 pilot tasks with a strong focus on telecommunications, healthcare and finance, Yicai.com reported. The initiative also added nine more pilot cities, including Dalian and Ningbo on top of the initial 11 regions, the newspaper said.