China Has Dumped $100 Billion In Treasurys In The Past Two Weeks
The PBoC cut the RRR for all banks by 50bp and offered additional reductions for leasing companies (300bp) and rural banks (50bp). All these will take effect as of 6 September, and the total amount of liquidity injected will be close to CNY700bn, or $106bn based on today’s onshore exchange rate. In perspective, the PBoC may have sold more official FX reserves than this amount since the currency regime change on 11 August.
From an operational perspective, China’s FX reserves are estimated to be two-thirds made up of relatively liquid assets. According to TIC data, China held $1,271bn US treasuries end-June 2015, but treasury bills and notes accounted for only $3.1bn.The currency composition is said to be similar to the IMF’s COFER data: 2/3 USD, 1/5 EUR and 5% each of GBP and JPY. Given that EUR and JPY depreciation contributed the most to the RMB’s NEER appreciation in the past year, it is plausible thatthe PBoC may not limit its intervention to selling only USD-denominated assets.* * *China’s FX reserves are still 134% of the recommended level, or in other words, around $900bn (1/4 of total) and can be used for currency intervention without severely impacting China’s external position.
China Devalues Yuan To Fresh 4-Year Lows, Arrests Top Securities Firm Exec As Stocks Slide Despite Rate Cuts
- *CHINA SETS YUAN REFERENCE RATE AT 6.4043 AGAINST U.S. DOLLAR
- *CHINA LOWERS YUAN FIXING TO WEAKEST SINCE AUG. 2011
- *ABOUT 17% OF MAINLAND STOCKS STILL HALTED FROM TRADING
- *CHINA MARGIN TRADING DEBT DROPS 1 TRILLION YUAN FROM JUNE PEAK
- *SHANGHAI MARGIN DEBT BALANCE HALVES FROM JUNE RECORD HIGH - Balance is lowest since Jan. 12
- CHINA TO RAISE TRANSACTION FEES ON STOCK INDEX FUTURES TRADING – EXCHANGE STATEMENT
- CHINA TO RESTRICT TRADING POSITIONS IN STOCK INDEX FUTURES – EXCHANGE STATEMENT
The South China Morning Post report that four brokers say the CSRC is probing their business
- Haitong Securities, GF Securities, Huatai Securities and Founder Securities
- All made stock exchange statements that they had received notices from the China Securities Regulatory Commission
- For suspected failure to review and verify clients’ identities
Along similar lines, Xinhua reported:
- 8 people from Citic Securities were being investigated for possible involvement in illegal securities trade
- A staff member from Caijing magazine was also being probed for spreading rumours
- A current and a former staff member at the CSRC were also being investigated for suspected insider trading
http://nunezreport.blogspot.com/
Source: http://nunezreport.blogspot.com/2015/08/china-has-dumped-100-billion-in.html
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