There is optimism sweeping across Asian markets following a statement by the People's Bank of China, (PBOC). The macro-communication issued at a rare briefing was comprehensive - a package of policy-easing measures aimed at soothing an ailing economy as detailed in a report by CNBC.

The People’s Bank of China announced it will reduce the reserve requirement ratio by 50 basis points, among other measures. A move in this direction is considered quite crucial for restoring some momentum in solving the ongoing economic challenges to regain confidence in investors.

The latest measures by PBOC include the slashing of interest rates and adjustment of reserve requirements for banks that aim at providing liquidity to the financial system to inspire more lending, particularly in strategic sectors battered by recent economic challenges. Analysts said these are crucial to get domestic demand kicking off well and sustain growth in light of the global economic uncertainties.

Further, it also announced it would cut the seven-day reverse repurchase rate from 1.7 per cent to 1.5 per cent. Pan Gongsheng, governor of the People’s Bank of China, also said that authorities could cut the loan prime rate by 0.2 to 0.25 percentage points, without specifying whether he was referring to the one-year or five-year. The one-year LPR currently stands at 3.35 per cent and five-year LPR is at 3.85 per cent, other measures also include reducing down payments for second homes, as well as 1 trillion yuan ($141.78 billion) of long-term funds.

In addition to cuts in interest rates, the PBOC also showed its commitment to currency stability. This is very important because the Chinese yuan has lately been under pressure due to external factors such as tensions on trade and the economy as well as geopolitical ones. The stable currency environment that would be created by the PBOC is seen to promote both domestic and foreign investments in the country.

Market reaction and prognosis<o:p></o:p>

The immediate market reaction has been positive with significant gains on major Chinese indices. Even within the time frame of a few hours, the Shanghai Composite Index shot up by more than 2 per cent as investors reflected in this sky-high market. It is not just the case with mainland markets; the Hang Seng Index in Hong Kong also witnessed notable gains.

These measures hence are in the right direction but it is yet to be seen how soon these ripple-down effects will take place in the bottom line of the economy. Manufacturing and real estate sectors have been under pressure because of the regulatory crackdown and softening consumer demand so the PBOC's moves are expected to offer much-needed comfort.

Long-term consequences<o:p></o:p>

Still, ahead of the curve, analysts are cautiously optimistic about the long-run effects of such policies. With such proactive steps from the PBOC, there might be a sign that it will get along with more accommodative monetary policy in response to persistent economic challenges. On the other hand, there are inflationary pressure concerns from increased liquidity in the market.

With the stimulus balance in between growth and price stability being a hurdle, it is mainly through these factors that investor confidence can be sustained for the remainder of the month. Global economic conditions led by the easing US interest rates along with the ongoing war between Russia and Ukraine are all going to have deep implications for future policy actions by central banks. Investors and market participants will follow these developments along with the decisions of the banks quite carefully to gain insights into future market movements.

<o:p>&nbsp;</o:p>

There is optimism sweeping across Asian markets following a statement by the People's Bank of China, (PBOC). The macro-communication issued at a rare briefing was comprehensive - a package of policy-easing measures aimed at soothing an ailing economy as detailed in a report by CNBC.

There is optimism sweeping across Asian markets following a statement by the People's Bank of China, (PBOC). The macro-communication issued at a rare briefing was comprehensive - a package of policy-easing measures aimed at soothing an ailing economy as detailed in a report by CNBC. The People’s Bank of China announced it will reduce the reserve requirement ratio by 50 basis points, among other measures. A move in this direction is considered quite crucial for restoring some momentum in solving the ongoing economic challenges to regain confidence in investors. The latest measures by PBOC include the slashing of interest rates and adjustment of reserve requirements for banks that aim at providing liquidity to the financial system to inspire more lending, particularly in strategic sectors battered by recent economic challenges. Analysts said these are crucial to get domestic demand kicking off well and sustain growth in light of the global economic uncertainties. Further, it also announced it would cut the seven-day reverse repurchase rate from 1.7 per cent to 1.5 per cent. Pan Gongsheng, governor of the People’s Bank of China, also said that authorities could cut the loan prime rate by 0.2 to 0.25 percentage points, without specifying whether he was referring to the one-year or five-year. The one-year LPR currently stands at 3.35 per cent and five-year LPR is at 3.85 per cent, other measures also include reducing down payments for second homes, as well as 1 trillion yuan ($141.78 billion) of long-term funds. In addition to cuts in interest rates, the PBOC also showed its commitment to currency stability. This is very important because the Chinese yuan has lately been under pressure due to external factors such as tensions on trade and the economy as well as geopolitical ones. The stable currency environment that would be created by the PBOC is seen to promote both domestic and foreign investments in the country. Market reaction and prognosis The immediate market reaction has been positive with significant gains on major Chinese indices. Even within the time frame of a few hours, the Shanghai Composite Index shot up by more than 2 per cent as investors reflected in this sky-high market. It is not just the case with mainland markets; the Hang Seng Index in Hong Kong also witnessed notable gains. These measures hence are in the right direction but it is yet to be seen how soon these ripple-down effects will take place in the bottom line of the economy. Manufacturing and real estate sectors have been under pressure because of the regulatory crackdown and softening consumer demand so the PBOC's moves are expected to offer much-needed comfort. Long-term consequences Still, ahead of the curve, analysts are cautiously optimistic about the long-run effects of such policies. With such proactive steps from the PBOC, there might be a sign that it will get along with more accommodative monetary policy in response to persistent economic challenges. On the other hand, there are inflationary pressure concerns from increased liquidity in the market. With the stimulus balance in between growth and price stability being a hurdle, it is mainly through these factors that investor confidence can be sustained for the remainder of the month. Global economic conditions led by the easing US interest rates along with the ongoing war between Russia and Ukraine are all going to have deep implications for future policy actions by central banks. Investors and market participants will follow these developments along with the decisions of the banks quite carefully to gain insights into future market movements.

People’s Bank of China eases the reserve requirement ratio by 50 basis points, stocks rally

China's central bank, the People's Bank of China (PBOC), has opted to maintain stability in its monetary policy by leaving a key policy rate unchanged on Sunday.<o:p></o:p>

The decision to keep the rate on one-year medium-term lending facility (MLF) loans at 2.50 per cent aligns with expectations, as uncertainties surrounding the Federal Reserve's easing timeline restrict Beijing's response.<o:p></o:p>

With approximately $69 billion worth of MLF loans set to expire this month, the PBOC's move resulted in a net fresh fund injection into the banking system. This decision underscores the delicate balancing act Beijing faces in supporting its economy amidst persistent deflationary pressures.<o:p></o:p>

The PBOC's decision to maintain the MLF rate comes amidst a backdrop of mounting pressure for further stimulus measures. However, any aggressive monetary movements risk reigniting depreciation pressure on the Chinese currency and capital outflows.<o:p></o:p>

Despite some market watchers anticipating additional easing measures shortly, the central bank's preference for stability remains evident.<o:p></o:p>

According to a Reuters report, Chang Wei Liang, FX &amp; credit strategist at DBS, suggests that policymakers are keen on anchoring the yuan and limiting negative rate differentials with the US dollar.<o:p></o:p>

Market sentiment has been closely monitored following the PBOC's recent actions, including a significant cut to bank reserves earlier in the month. Despite these efforts, sentiment stabilisation has proved elusive.<o:p></o:p>

Ting Lu, chief China economist at Nomura, anticipates further rate cuts in both the open market operations (OMO) and MLF rates in the first and second quarters. Lu observes that previous easing measures, such as an earlier-than-expected cut in the reserve requirement ratio (RRR), have failed to achieve the desired impact on market sentiment.<o:p></o:p>

Looking ahead, there are expectations that the benchmark loan prime rate (LPR) could see a reduction in the coming days, particularly for the five-year tenor.<o:p></o:p>

Lowering the five-year LPR is seen as a measure to stabilise confidence, promote investment and consumption, and support the stable development of the real estate market. The monthly fixing of the LPRs is scheduled for February 20th, further indicating potential adjustments on the horizon.<o:p></o:p>

In its latest monetary policy implementation report, the PBOC reaffirmed its commitment to flexible policies aimed at boosting domestic demand while maintaining price stability. The central bank's stance underscores the ongoing efforts to navigate the complexities of the economic landscape, balancing the need for stimulus with stability concerns.<o:p></o:p>

As market dynamics continue to evolve, policymakers remain vigilant in their approach to sustaining economic growth.<o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

<o:p>&nbsp;</o:p>

China's central bank, the People's Bank of China (PBOC), has opted to maintain stability in its monetary policy by leaving a key policy rate unchanged on Sunday.

China's central bank, the People's Bank of China (PBOC), has opted to maintain stability in its monetary policy by leaving a key policy rate unchanged on Sunday. The decision to keep the rate on one-year medium-term lending facility (MLF) loans at 2.50 per cent aligns with expectations, as uncertainties surrounding the Federal Reserve's easing timeline restrict Beijing's response. With approximately $69 billion worth of MLF loans set to expire this month, the PBOC's move resulted in a net fresh fund injection into the banking system. This decision underscores the delicate balancing act Beijing faces in supporting its economy amidst persistent deflationary pressures. The PBOC's decision to maintain the MLF rate comes amidst a backdrop of mounting pressure for further stimulus measures. However, any aggressive monetary movements risk reigniting depreciation pressure on the Chinese currency and capital outflows. Despite some market watchers anticipating additional easing measures shortly, the central bank's preference for stability remains evident. According to a Reuters report, Chang Wei Liang, FX & credit strategist at DBS, suggests that policymakers are keen on anchoring the yuan and limiting negative rate differentials with the US dollar. Market sentiment has been closely monitored following the PBOC's recent actions, including a significant cut to bank reserves earlier in the month. Despite these efforts, sentiment stabilisation has proved elusive. Ting Lu, chief China economist at Nomura, anticipates further rate cuts in both the open market operations (OMO) and MLF rates in the first and second quarters. Lu observes that previous easing measures, such as an earlier-than-expected cut in the reserve requirement ratio (RRR), have failed to achieve the desired impact on market sentiment. Looking ahead, there are expectations that the benchmark loan prime rate (LPR) could see a reduction in the coming days, particularly for the five-year tenor. Lowering the five-year LPR is seen as a measure to stabilise confidence, promote investment and consumption, and support the stable development of the real estate market. The monthly fixing of the LPRs is scheduled for February 20th, further indicating potential adjustments on the horizon. In its latest monetary policy implementation report, the PBOC reaffirmed its commitment to flexible policies aimed at boosting domestic demand while maintaining price stability. The central bank's stance underscores the ongoing efforts to navigate the complexities of the economic landscape, balancing the need for stimulus with stability concerns. As market dynamics continue to evolve, policymakers remain vigilant in their approach to sustaining economic growth. (With inputs from Reuters)

China’s Central Bank maintains policy stability while economic uncertainties persist

China's central bank the people’s bank of china popularly known as People's Bank of China (PBOC) has purchased 1.75 crore shares in one of India's largest housing finance lenders, HDFC.&nbsp;

According to reports the deal that possibly happened in the March quarter has raised the total stake of PBOC in Indian firm to a little over 1 per cent. &nbsp;The shares of HDFC have come down by over 32% since the slide of Indian markets begun to post the outbreak of coronavirus.​&nbsp;

HDFC also owns over 20 per cent stake in HDFC bank, India's leading private sector bank. PBOC, an existing shareholder of HDFC earlier owned 0.8 per cent in the company as of March 2019.&nbsp;

The disclosure to stock exchanges has been made now since the stake has hit the 1 per cent regulatory threshold.&nbsp;

Amid the stock market crash, china has been buying stakes across major Asian financial institutions. Earlier in 2014, PBOC had picked up stakes in many high profile Italian companies during the eurozone debt crisis.

According to reports, Chinese banks were looking for newer avenues of investments in India.

The price at which shares were purchased could not be confirmed.HDFC stock saw a 33 per cent correction during the January-March quarter - from Rs 2,433.75 on January 1 to Rs 1,630.45 on March 31.

It had hit a low of Rs 1,501.80 apiece on the BSE on March 24, from where it saw a sharp rally to Rs 1,754 on March 27.

Central banks typically have investments in various asset classes including gold, foreign currencies and also bonds, including both government and corporate ones.&nbsp;

(With inputs from agencies)

China's central bank the people’s bank of china popularly known as People's Bank of China (PBOC) has purchased 1.75 crore shares in one of India's largest housing finance lenders, HDFC.

China's central bank the people’s bank of china popularly known as People's Bank of China (PBOC) has purchased 1.75 crore shares in one of India's largest housing finance lenders, HDFC. According to reports the deal that possibly happened in the March quarter has raised the total stake of PBOC in Indian firm to a little over 1 per cent. The shares of HDFC have come down by over 32% since the slide of Indian markets begun to post the outbreak of coronavirus. HDFC also owns over 20 per cent stake in HDFC bank, India's leading private sector bank. PBOC, an existing shareholder of HDFC earlier owned 0.8 per cent in the company as of March 2019. The disclosure to stock exchanges has been made now since the stake has hit the 1 per cent regulatory threshold. Amid the stock market crash, china has been buying stakes across major Asian financial institutions. Earlier in 2014, PBOC had picked up stakes in many high profile Italian companies during the eurozone debt crisis. According to reports, Chinese banks were looking for newer avenues of investments in India. The price at which shares were purchased could not be confirmed.HDFC stock saw a 33 per cent correction during the January-March quarter - from Rs 2,433.75 on January 1 to Rs 1,630.45 on March 31. It had hit a low of Rs 1,501.80 apiece on the BSE on March 24, from where it saw a sharp rally to Rs 1,754 on March 27. Central banks typically have investments in various asset classes including gold, foreign currencies and also bonds, including both government and corporate ones. (With inputs from agencies)

China's central bank  buys 1.75 crore shares in HDFC, raises stake to over 1%

China's central bank said on Friday it was cutting the amount of <a href="https://www.wionews.com/world/us-china-trade-war-to-knock-05-points-off-global-growth-french-finance-minister-247859">cash that banks must</a> hold as reserves for the third time this year, releasing $126.35 billion&nbsp;in liquidity to shore up the flagging economy.

Analysts had expected China to announce more policy easing measures soon as the world's second-largest economy comes under growing pressure from escalating US&nbsp;tariffs and sluggish domestic demand.

The People's Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) by 50 basis points (bps) for all banks, with an additional 100 bps cut for qualified city commercial banks. The RRR for large banks will be lowered to 13.0 per cent.

The PBOC has now slashed the ratio seven times since early 2018. The size of the latest move was at the upper end of market expectations, and the number of funds released will be the largest so far in the current easing cycle.

The broad-based cut, which will release 800 billion yuan in liquidity, is effective September&nbsp;16. The additional targeted cut will release 100 billion yuan, in two phases effective October 15 and November 15.

"The move shows policymakers are increasingly worried but it’s far from enough to stabilise the economy," said Larry Hu, head of Greater China economics at Macquarie Group in Hong Kong.

"The key constraint is that everything is slowing down corporates are not willing to invest because of the trade war, a global slowdown, and weak infrastructure and property sector growth."

The latest move to spur bank lending followed a cabinet meeting on September 4 that pledged to implement both broad and targeted cuts in the RRR "in a timely manner".

The PBOC said it will maintain a prudent monetary policy and avoid a flood-like stimulus while increasing counter-cyclical adjustments and maintaining reasonable and abundant liquidity.

Analysts say China's economic growth has likely cooled further this quarter from a near 30-year low of 6.2 per cent in April-June. Morgan Stanley says it is now tracking the lower end of the government's full-year target range of around 6-6.5 per cent. 
&nbsp; 
With Washington imposing new tariffs from September 1 and threatening more measures from October 1 and December 15, some economists have recently cut their China growth estimates for next year to below 6 per cent, which would breach Beijing's longer-term development goal.

The central bank is also widely expected to cut one or more of its key policy interest rates in mid-September for the first time in four years as it works to reduce corporate funding costs.

"I think it's very likely they will cut the LPR (loan prime rate) by about 5-10 bps later this month. I also expect another RRR cut of 50 bps by the end of this year,” Macquarie's Hu said.

Despite a slew of support measures and policy easing since last year, China's economy is still struggling to get back on a firm footing.

July's data showed growth stumbled more sharply than expected as the intensifying trade war with the United States took a heavier toll, and August factory surveys pointed to continued weakness.

Prior to the latest RRR cut, the central bank had pumped out 3.63 trillion yuan in net liquidity through reserve cuts since early 2018, according to Reuters calculations based on PBOC data and analyst estimates.

The PBOC's hefty injections have helped bring down companies' borrowing costs, which had jumped early last year as regulators clamped down on riskier types of financing and debt.

But analysts have cautioned that some companies may be merely refinancing existing debt at better rates, rather than borrowing to fund fresh investments.

Analysts say the problem is not a lack of credit the PBOC has injected generous amounts of liquidity but weakening business and consumer confidence as the trade war drag on. That has weighed on activity from manufacturing and investment to retail sales.

In the latest escalation in the protracted trade dispute, the United States began imposing 15 per cent&nbsp;tariffs on a variety of Chinese goods on September&nbsp;1&nbsp;including footwear, smartwatches, and flat-panel televisions and China began imposing new duties on US crude.

The next high-level trade talks are slated for early October, but a lasting peace seems more elusive than ever.

The government has repeatedly said it will not resort to "flood-like" stimulus as it did in past economic downturns, which left a mountain of debt and sparked fears of property market bubbles.

Instead, Beijing has relied more on fiscal stimuli such as increased infrastructure spending and tax cuts, though the boost has been milder than expected so far.

The cabinet said on Wednesday China will allow local governments to issue special-purpose bonds earlier than normal next year to help steady growth, and specified for the first time that about 20 per cent&nbsp;of all special purpose bonds issued by every province could be used as project capital.

Many local governments are facing increasing fiscal strains as tax cuts and the broader economic slowdown reduce revenues, hampering their ability to implement infrastructure projects.

The OECD has estimated that China's fiscal stimulus was equivalent to 4.25 per cent of gross domestic product (GDP) in 2019, up from 2.94 per cent last year.

China's central bank said on Friday it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing $126.35 billion in liquidity to shore up the flagging economy.

China's central bank said on Friday it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing $126.35 billion in liquidity to shore up the flagging economy. Analysts had expected China to announce more policy easing measures soon as the world's second-largest economy comes under growing pressure from escalating US tariffs and sluggish domestic demand. The People's Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) by 50 basis points (bps) for all banks, with an additional 100 bps cut for qualified city commercial banks. The RRR for large banks will be lowered to 13.0 per cent. The PBOC has now slashed the ratio seven times since early 2018. The size of the latest move was at the upper end of market expectations, and the number of funds released will be the largest so far in the current easing cycle. The broad-based cut, which will release 800 billion yuan in liquidity, is effective September 16. The additional targeted cut will release 100 billion yuan, in two phases effective October 15 and November 15. "The move shows policymakers are increasingly worried but it’s far from enough to stabilise the economy," said Larry Hu, head of Greater China economics at Macquarie Group in Hong Kong. "The key constraint is that everything is slowing down corporates are not willing to invest because of the trade war, a global slowdown, and weak infrastructure and property sector growth." The latest move to spur bank lending followed a cabinet meeting on September 4 that pledged to implement both broad and targeted cuts in the RRR "in a timely manner". The PBOC said it will maintain a prudent monetary policy and avoid a flood-like stimulus while increasing counter-cyclical adjustments and maintaining reasonable and abundant liquidity. Analysts say China's economic growth has likely cooled further this quarter from a near 30-year low of 6.2 per cent in April-June. Morgan Stanley says it is now tracking the lower end of the government's full-year target range of around 6-6.5 per cent. With Washington imposing new tariffs from September 1 and threatening more measures from October 1 and December 15, some economists have recently cut their China growth estimates for next year to below 6 per cent, which would breach Beijing's longer-term development goal. The central bank is also widely expected to cut one or more of its key policy interest rates in mid-September for the first time in four years as it works to reduce corporate funding costs. "I think it's very likely they will cut the LPR (loan prime rate) by about 5-10 bps later this month. I also expect another RRR cut of 50 bps by the end of this year,” Macquarie's Hu said. Despite a slew of support measures and policy easing since last year, China's economy is still struggling to get back on a firm footing. July's data showed growth stumbled more sharply than expected as the intensifying trade war with the United States took a heavier toll, and August factory surveys pointed to continued weakness. Prior to the latest RRR cut, the central bank had pumped out 3.63 trillion yuan in net liquidity through reserve cuts since early 2018, according to Reuters calculations based on PBOC data and analyst estimates. The PBOC's hefty injections have helped bring down companies' borrowing costs, which had jumped early last year as regulators clamped down on riskier types of financing and debt. But analysts have cautioned that some companies may be merely refinancing existing debt at better rates, rather than borrowing to fund fresh investments. Analysts say the problem is not a lack of credit the PBOC has injected generous amounts of liquidity but weakening business and consumer confidence as the trade war drag on. That has weighed on activity from manufacturing and investment to retail sales. In the latest escalation in the protracted trade dispute, the United States began imposing 15 per cent tariffs on a variety of Chinese goods on September 1 including footwear, smartwatches, and flat-panel televisions and China began imposing new duties on US crude. The next high-level trade talks are slated for early October, but a lasting peace seems more elusive than ever. The government has repeatedly said it will not resort to "flood-like" stimulus as it did in past economic downturns, which left a mountain of debt and sparked fears of property market bubbles. Instead, Beijing has relied more on fiscal stimuli such as increased infrastructure spending and tax cuts, though the boost has been milder than expected so far. The cabinet said on Wednesday China will allow local governments to issue special-purpose bonds earlier than normal next year to help steady growth, and specified for the first time that about 20 per cent of all special purpose bonds issued by every province could be used as project capital. Many local governments are facing increasing fiscal strains as tax cuts and the broader economic slowdown reduce revenues, hampering their ability to implement infrastructure projects. The OECD has estimated that China's fiscal stimulus was equivalent to 4.25 per cent of gross domestic product (GDP) in 2019, up from 2.94 per cent last year.

China cuts banks' reserve ratios, frees up $126 billion for loans as economy slows

China's&nbsp;central&nbsp;bank&nbsp;said on early Tuesday it will sell&nbsp;yuan-denominated&nbsp;bills&nbsp;in&nbsp;Hong&nbsp;Kong&nbsp;in late June, in a move that some market analysts believed was aimed at stemming a sharp decline in the&nbsp;yuan&nbsp;currency.

The&nbsp;yuan&nbsp;has weakened by more than 2.6 per cent since the start of May, suffering its worst monthly performance in ten months in the wake of a major escalation in the <a href="https://www.wionews.com/business-economy/china-exports-grow-despite-us-tariffs-but-import-slump-most-in-nearly-three-years-225842">Sino-US&nbsp;trade dispute.</a>

The <a href="https://www.wionews.com/business-economy/chinas-top-banking-regulator-says-yuan-bears-will-suffer-heavy-losses-221450">People's&nbsp;Bank&nbsp;of&nbsp;China&nbsp;(PBOC)</a> said the bill auction in&nbsp;Hong&nbsp;Kong&nbsp;is aimed at "improving the&nbsp;yuan&nbsp;bond yield curve" in the financial hub, according to a statement on its website.

It will be the fourth sale of offshore&nbsp;yuan&nbsp;bills&nbsp;in&nbsp;Hong&nbsp;Kong. Like the first, last November, the latest sale will be an "off-cycle" issuance as there are no bonds due to expire this month. The last two sales were roll-overs.

The&nbsp;central&nbsp;bank&nbsp;had tapped the market every three months with the same deal size and structure since the first issuance in November.

Traders believe the move by the&nbsp;central&nbsp;bank&nbsp;was a warning against&nbsp;yuan&nbsp;short-sellers in the offshore market as the Chinese currency has weakened to an over six-month low and neared psychologically critical 7 per dollar, a level that was last seen during the global financial crisis.

"The&nbsp;central&nbsp;bank&nbsp;is defending the exchange rate by stabilising expectations onshore and fighting against the&nbsp;yuan&nbsp;bears offshore through the bill auction," said a trader at a Chinese bank.

The onshore spot rate is allowed to trade with a range of 2 per cent above or below the official fixing on any given day, but there is no such restriction on offshore&nbsp;yuan.

Official midpoint fixing has been set in a very tight range just above 6.9 per dollar in the past few weeks and come in persistently firmer than market consensus.

Market participants believe the&nbsp;central&nbsp;bank&nbsp;is seeking to dampen volatility and counteract depreciation expectations.

Bill sales will theoretically freeze&nbsp;yuan&nbsp;funds in&nbsp;Hong&nbsp;Kong&nbsp;and push up the borrowing cost for the Chinese currency. By soaking up&nbsp;yuan&nbsp;liquidity in&nbsp;Hong&nbsp;Kong, the auction will make it more expensive for speculators to bet on a&nbsp;weakening&nbsp;yuan.

The bill auction statement also came as the gap between the onshore and offshore&nbsp;yuan&nbsp;widened. As of 0334 GMT, the spread between the two rates stood at 125 pips, with offshore spot rate trading at a discount at 6.9298 per dollar. The spread stood at above 200 pips in most trading sessions last month.

Ken Cheung, senior Asian FX strategist at Mizuho&nbsp;Bank&nbsp;in&nbsp;Hong&nbsp;Kong&nbsp;said the PBOC is sending a slightly conflicting signal to the market as it said there is no red line for the exchange rate, but on the other hand it is stabilising the currency.

Cheung said additional downside pressure on the&nbsp;yuan&nbsp;could emerge if trade negotiations between&nbsp;China&nbsp;and the United States fall through during the G20 summit in Japan later this month.

PBOC Governor Yi Gang said last Friday no "numerical number" for the exchange rate was more important than another.

"The trade war would have a temporary depreciation pressure on the renminbi, but you see, after the noise, the renminbi will continue to be very stable and relatively strong compared to emerging market currencies, even compared to convertible currencies," Bloomberg quoted Yi as saying, where he used the&nbsp;yuan's official name.

The PBOC did not elaborate on the bill auction plan.

China's central bank said on early Tuesday it will sell yuan-denominated bills in Hong Kong in late June, in a move that some market analysts believed was aimed at stemming a sharp decline in the yuan currency.

China's central bank said on early Tuesday it will sell yuan-denominated bills in Hong Kong in late June, in a move that some market analysts believed was aimed at stemming a sharp decline in the yuan currency. The yuan has weakened by more than 2.6 per cent since the start of May, suffering its worst monthly performance in ten months in the wake of a major escalation in the Sino-US trade dispute. The People's Bank of China (PBOC) said the bill auction in Hong Kong is aimed at "improving the yuan bond yield curve" in the financial hub, according to a statement on its website. It will be the fourth sale of offshore yuan bills in Hong Kong. Like the first, last November, the latest sale will be an "off-cycle" issuance as there are no bonds due to expire this month. The last two sales were roll-overs. The central bank had tapped the market every three months with the same deal size and structure since the first issuance in November. Traders believe the move by the central bank was a warning against yuan short-sellers in the offshore market as the Chinese currency has weakened to an over six-month low and neared psychologically critical 7 per dollar, a level that was last seen during the global financial crisis. "The central bank is defending the exchange rate by stabilising expectations onshore and fighting against the yuan bears offshore through the bill auction," said a trader at a Chinese bank. The onshore spot rate is allowed to trade with a range of 2 per cent above or below the official fixing on any given day, but there is no such restriction on offshore yuan. Official midpoint fixing has been set in a very tight range just above 6.9 per dollar in the past few weeks and come in persistently firmer than market consensus. Market participants believe the central bank is seeking to dampen volatility and counteract depreciation expectations. Bill sales will theoretically freeze yuan funds in Hong Kong and push up the borrowing cost for the Chinese currency. By soaking up yuan liquidity in Hong Kong, the auction will make it more expensive for speculators to bet on a weakening yuan. The bill auction statement also came as the gap between the onshore and offshore yuan widened. As of 0334 GMT, the spread between the two rates stood at 125 pips, with offshore spot rate trading at a discount at 6.9298 per dollar. The spread stood at above 200 pips in most trading sessions last month. Ken Cheung, senior Asian FX strategist at Mizuho Bank in Hong Kong said the PBOC is sending a slightly conflicting signal to the market as it said there is no red line for the exchange rate, but on the other hand it is stabilising the currency. Cheung said additional downside pressure on the yuan could emerge if trade negotiations between China and the United States fall through during the G20 summit in Japan later this month. PBOC Governor Yi Gang said last Friday no "numerical number" for the exchange rate was more important than another. "The trade war would have a temporary depreciation pressure on the renminbi, but you see, after the noise, the renminbi will continue to be very stable and relatively strong compared to emerging market currencies, even compared to convertible currencies," Bloomberg quoted Yi as saying, where he used the yuan's official name. The PBOC did not elaborate on the bill auction plan.

China central bank to issue bills in Hong Kong to stabilise weakening yuan

Virtual currencies like bitcoin are assets but bitcoin in itself does not have the fundamental attributes needed to be a currency that could meet modern economic development needs, a Chinese central bank adviser said.

Sheng Songcheng, adviser to the People&#39;s Bank of China (PBOC), made the comments in an interview with financial magazine Yicai.

&quot;Bitcoin does not have the fundamental attributes needed to be a currency as it is a string of code generated by complex algorithms...But I do not deny that virtual currencies have technical value and are a type of asset,&quot; he said.

His comments came after the Chinese central bank increased scrutiny of the country&#39;s bitcoin exchanges earlier this year, a move that prompted the companies to stop margin lending, introduced trading fees and issue rules to rein in users.

Many governments around the world are still mulling how to regulate and classify bitcoin, whose value surged in June to hit a record just shy of $3,000. China has classified it as a &quot;virtual good&quot;.

Squaring in on bitcoin, Sheng said expectations that bitcoin supply would be capped in the year 2140 would make it difficult for it to become a medium of exchange that could meet modern economic development needs as money supply should be related to economic needs.

He also said that Chinese monetary authorities should study issuing a central bank virtual currency that it could regulate and run properly.

Bitcoin are 'virtual currency' with a string of codes generated by complex algorithms

Virtual currencies like bitcoin are assets but bitcoin in itself does not have the fundamental attributes needed to be a currency that could meet modern economic development needs, a Chinese central bank adviser said. Sheng Songcheng, adviser to the People's Bank of China (PBOC), made the comments in an interview with financial magazine Yicai. "Bitcoin does not have the fundamental attributes needed to be a currency as it is a string of code generated by complex algorithms...But I do not deny that virtual currencies have technical value and are a type of asset," he said. His comments came after the Chinese central bank increased scrutiny of the country's bitcoin exchanges earlier this year, a move that prompted the companies to stop margin lending, introduced trading fees and issue rules to rein in users. Many governments around the world are still mulling how to regulate and classify bitcoin, whose value surged in June to hit a record just shy of $3,000. China has classified it as a "virtual good". Squaring in on bitcoin, Sheng said expectations that bitcoin supply would be capped in the year 2140 would make it difficult for it to become a medium of exchange that could meet modern economic development needs as money supply should be related to economic needs. He also said that Chinese monetary authorities should study issuing a central bank virtual currency that it could regulate and run properly.

Bitcoin does not have the fundamental attribute to be a currency- China central bank adviser