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ASIAN SESSION WRAP CHINA – 13TH JANUARY 2017
Peoples Bank of China (PBOC) sets USD/CNY at 6.8909. Thursday at 6.9141.

TRADE BALANCE

• Trade Balance (USD) Dec: 40.82B vs. 46.50B exp. Previous 44.61B
• Exports (YoY) Dec: -6.1% vs. -3.5% exp. Previous 0.1%
• Imports (YoY) Dec: 3.1% vs. 2.7% exp. Previous 6.7%

The numbers were not that great, with exports down significantly. Chinese customs said that the foreign trade issue still faces difficulties. Exports and imports however had risen in Q4. Trade also had a mild recovery in Q4, with trade stabalising and improving throughout 2016.

Chinese coal imports were up 50% in December than a year ago (25.2% increase y/y), with the country stockpiling for the winter. Iron ore was down -8.8% y/y in December.

Chinese customs continued to say that;

• The new US president may add trade protectionist measures, which may limit growth of China’s exports
• China’s economy can handle increased challenges to foreign trade. The challenges that China will look to face in foreign trade are not short-term
• China strongly opposed trade protectionism
• China will be watching Trump’s trade policy very closely

PBOC CONTINUES TO INJECT

• 10B Yuan in 7-day reverse repos
• 60B Yuan in 28-day reverse repos

This week PBOC drained a net of 100B Yuan from the money markets through OMO’s. With last week standing at 595B Yuan.

 

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ASIAN SESSION WRAP CHINA – 19TH JANUARY 2017
Peoples Bank of China (PBOC) sets USD/CNY at 6.8568. Yesterday at 6.8525.

CHINA’S SAFE
A spokeswoman for SAFE (China’s State Administration of Foreign Exchange)

SAFE has been the much talked entity in China since the issues with capital outflows in the country.

SAFE have said that capital outflow pressures have eased last year. With Q4 2016 outflow pressure being less strong than in the earliest part of the year. Chinese banks had bought 858.3B Yuan of foreign currency for clients in December and sold 1.16T Yuan of foreign currency for clients, making a net total sold of 257.7B Yuan of foreign currency for clients.

SAFE said it was closely watching the impact from the Federal Reserve as it was expecting rate hikes and further USD strengthening. FX reserves remained ample, and fluctuations in China’s FX reserves are normal. For China’s future outlook, it expects to see China’s foreign debt to stabilize and rebound this year.

CHINA’S COMMERCE MINISTRY
China’s commerce Ministry had a few comments on the matter. They believe that China and the US can properly solve any trade problems with cooperation and dialogue. China is willing to work with the new US government to promote health China-US ties, and the commerce ministry would like to highlight that both sides would be hurt in any US-China trade fight.

PBOC CONTINUES TO INJECT

• 100B Yuan in 7-day reverse repos
• 150B Yuan in 28-day reverse repos

Another day of big injections from PBOC. The influence are rising money-market rates, likely due to the rising demand for cash ahead of the Lunar New Year holidays which are between January 27th – February 2nd. Usually during the Lunar New Year holiday period, there are much larger cash withdrawals for gifts, parties and for travel over the holiday.

The 28-day Reverse Repos are to cover the New Year holiday period while the 7-Day reverse OMO’s are for immediate liquidity.

The net injection from PBOC this week alone is 1.035Tr Yuan (the highest amount since 2008).