Latest news with #PBoC
Finextra
20-07-2025
- Business
- Finextra
CNY Continues to Dwindle in 2025 as China Seeks Renminbi Stability: By Dmytro Spilka
The ongoing trade tensions between the United States and China are playing out throughout different forex markets as the dollar continues to lose value. But is a strengthened renminbi in China's interests? USD/CNY ended the first half of 2025 1.8% down as United States President Donald Trump introduced reciprocal tariffs in a move that prompted a series of rapid trade war escalations with China. The move initially saw the dollar gain significant ground on the renminbi as fears over China's trade appeal began to fade. However, a de-escalation in tensions has seen the yuan climb to an eight-month high against the USD as Trump continues to position himself at odds with the US economy in the short term. Tariffs and the Big Beautiful Bill One of the biggest emerging complications for USD/CNY is the narrow passing of Trump's so-called 'Big Beautiful Bill,' in a move that's projected to add $3.3 trillion to government debt over the coming 10 years. While the Big Beautiful Bill has caused the dollar to weaken, April's tariff escalation with China, which saw levies briefly accelerate to 145% before a de-escalation brought negotiations between the nations, caused the yuan to struggle. April saw the yuan fall to its lowest levels since 2023 after the People's Bank of China (PBoC) loosened its grip on the currency in a bid to maintain the nation's appeal as a trading partner to other nations. Logically, a weaker yuan can be a functional means of offsetting the financial impact of tariffs on imports from China. With the deadline between the United States and China to negotiate a trade agreement set to expire in August, the outcome of any prospective trade agreement will have a decisive effect on USD/CNY. China Pursues Stability With Asia responsible for the majority of the United States' trillion-dollar trade goods deficit, it's reasonable to expect the renminbi to experience plenty of external pressures over the second half of 2025, regardless of its resilience against the dollar. Given that the PBoC manages the yuan through a daily fixing mechanism, the central bank has plenty of power to strengthen or weaken the currency in a bid to manage the impact of its trade challenges with the United States. While some analysts have speculated that it could be in the interests of the PBoC to weaken the yuan further to recapture its appeal as a global trade destination, experts have suggested that China will instead seek to stabilise the renminbi against the dollar. Fears over the impact of a sharp devaluation of CNY and its ramifications in triggering capital outflows and widespread financial market instability indicate that China would be incapable of weakening the yuan to offset the impact of tariffs should a trade deal fail to be agreed upon. ING analysts suggest that China's decision to only set a small move higher in its price fixings during the peak depreciation period of the yuan in April shows that the PBoC won't actively seek to devalue the currency in the face of exceptionally high tariff pressures. Trading in Volatility With China avoiding taking drastic measures to instead maintain its pursuit of stability, the outlook of USD/CNY will likely be decided by the Trump administration and its control over trade. According to ING, a long-term de-escalation on trade would upgrade the medium-term outlook for the yuan, sparking greater capital inflows, while US Federal Reserve rate cuts could help to support renminbi growth further as investors look overseas for opportunities. Given President Trump's openness in communicating news frequently on social media, it's clear that volatility in USD/CNY will persist throughout 2025, regardless of the outcome of trade negotiations between the United States and China. For traders seeking opportunities in USD/CNY, using a reliable broker like Just2Trade is the first step you should take. Just2Trade is a leading, EU-based broker licensed by the Cyprus Securities and Exchange Commission (CYSEC) with over 155,000 customer accounts. Stability and Unpredictability China's bid to introduce more stability to the yuan at a time when the currency is increasingly exposed to market volatility means that the United States will likely be positioned at the forefront of movements between the USD/CNY pair. The outcome of the trade negotiations between the United States and China before the August reciprocal tariff deadline will be decisive in shaping USD/CNY over the second half of 2025. However, the best trading opportunities will come from anticipating the twists and turns over the weeks ahead. With Trump's openness to comment on the performance of ongoing negotiations, there's likely to be plenty of uncertainty ahead for the trading pair. For forex traders with a higher risk appetite, there will also be many trading opportunities in the near future.
RTHK
17-07-2025
- Business
- RTHK
Bond Connect tweaks enrich investment spectrum: expert
Bond Connect tweaks enrich investment spectrum: expert Currently, the Southbound Bond Connect has a daily investment quota of 20 billion yuan, and an annual limit of 500 billion yuan. File photo: RTHK A fixed-asset investment veteran said that the latest tweaks on the Bond Connect scheme enrich the investment spectrum for onshore investors, but called for the link's annual quota to be further increased to facilitate growing transaction volume. The comments came after a senior official from the People's Bank of China (PBoC) announced last week that the southbound leg of the bond trading link will be opened to non-banking players such as securities and wealth management firms to invest in offshore bonds. The move marked a significant step by Beijing to relax capital-flow restrictions, as previously only banks and qualified institutional investors were eligible. It also offered an opportunity for onshore investors looking for higher yields, according to Shen Li, Head of Foreign Exchange Sales, Asia Pacific at State Street Markets. "It all comes down to the fact that you can further diversify out of the onshore investment opportunities, as at the moment the bond yield onshore is still on the low end as officials want to keep the loose monetary policy to stipulate the local economy," he told RTHK. "Investors…generally invest in the China Government Bonds (CGBs) and Policy Bank debts, and the Non-convertible Debentures (NCDs). I think by opening up the southbound channel, it just opens up the spectrum for investors to choose from." While the policy bank bonds, similar to the CGBs, are issued by state-backed financial institutions to promote specific public policy objectives, NCDs are corporate bonds with fixed interest and tenures. Li added that the Bond Connect expansion, along with other planned relaxations including that on the Southbound repurchase agreement (repo), a short-term borrowing and lending transaction involving the sale of securities with a promise to repurchase them at a later date, as well as that on the Swap Connect programme, would also enrich the two-way gates for onshore and offshore investors to choose from. However, Li felt the southbound link's limits of 20 billion yuan each day, or 500 billion yuan annually should be adjusted accordingly, after they were unchanged since the scheme's inception in 2021. "The quota [of the scheme] matters because the [current] 500 billion yuan a year does provide a big cap on the investment opportunity," he explained. "At this moment, I don't think there's any official number being rolled out yet. However, such [an] expansion without an increase on the quota probably doesn't make sense."
Coin Geek
02-07-2025
- Business
- Coin Geek
Hong Kong ups competitiveness with new stablecoin laws
Getting your Trinity Audio player ready... Hong Kong's stablecoin bill and its continued issuance of digital asset policies give it a competitive edge in the race to become the global digital assets hub, says the city-state's financial secretary, Paul Chan. In May, Hong Kong legislators passed the Stablecoin Ordinance, becoming the first major economy with an act fully dedicated to stablecoins. It takes effect in August, and according to Chan, it will make Hong Kong a haven for digital asset activity. 'We have also just completed the legislation of stablecoins, which will come into effect on August 1, making Hong Kong one of the first jurisdictions in the world to establish a statutory regulatory framework for stablecoins,' Chan stated in his speech at the Wealth Management Expo. Hong Kong's stablecoin pursuits come amid a change of tune from mainland China, which has been an anti-digital asset for years. Speaking at a forum in Shanghai, the Governor of the People's Bank of China (PBoC), Pan Gongsheng, acknowledged the increasing importance of stablecoins in global commerce and the need for China to keep up. Stablecoins and other blockchain innovations 'are enabling real-time settlement at the point of payment, fundamentally reshaping the traditional payment infrastructure and significantly shortening the cross-border payment chain,' he told the attendees. However, China has not announced any plans to let up on its digital asset restrictions, leaving Hong Kong as the testing ground for Chinese firms. Chinese firms are already exploring stablecoins in Hong Kong. E-commerce giant (NASDAQ: JD) has been testing a Hong Kong dollar-backed stablecoin and wrapped up the second phase of its pilot in May. The company, through its Hong Kong subsidiary, expects to obtain a license in the fourth quarter and launch its stablecoin by year-end. Ant Group, an affiliate of China's second-largest company by market cap, Alibaba (NASDAQ: BABAF), is also pursuing a stablecoin license in Hong Kong. Hong Kong builds on regulatory clarity with new policy statement Meanwhile, the city-state has published yet another policy statement offering more clarity on digital asset regulation. Dubbed 'Policy Statement 2.0 on the Development of Digital Assets in Hong Kong,' it introduces the new 'LEAP' framework that doubles down on stablecoin and asset tokenization policies. The first policy statement was published in October 2022. Under LEAP, the city will unify its regulatory framework for all virtual asset service providers (VASPs), from exchanges and stablecoin issuers to custodians and brokerages. The Securities and Futures Commission (SFC) will spearhead the licensing of these VASPs, with the Hong Kong Monetary Authority (HKMA) charged with the legal oversight over the tokenization of real-world assets (RWAs). The new policy also intends to push for tokenization, with the government pledging to regularly issue tokenized bonds. It will also incentivize market players to tokenize RWAs through clearer laws and expanded market opportunities, such as allowing secondary trading of tokenized exchange-traded funds (ETFs). Hong Kong will promote 'the tokenisation of a broader range of assets and financial instruments, demonstrating the versatility of this technology across sectors such as precious metals (e.g. gold) and non-ferrous metals, and renewable energy (e.g. solar panels),' the policy statement said. In one of the more impactful proposals for investors, the policy will allow private funds and family offices to claim tax breaks on profits generated from tokenized securities and digital asset holdings. The government also pledged to partner with academia to strengthen industry talent and welcomed proposals on how it can better support real-world usage of stablecoins. 'We strive to build a more flourishing digital asset ecosystem which will integrate the real economy with social life through a prudent regulatory regime and encouragement to market innovation, such that it will bring benefits to both the economy and society while consolidating Hong Kong's leading position as an international financial centre,' commented Chan. Industry experts noted that the new policy statement came barely a week after the United States Senate passed the GENIUS Act, which establishes a regulatory framework for stablecoins. According to Andrew Fei, a partner at King & Wood Mallesons law firm, accelerated regulatory efforts show that the 'global race for digital assets innovation is well underway.' Watch | Spotlight On: Centi Franc—the truly stable stablecoin title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="">
Fibre2Fashion
20-06-2025
- Business
- Fibre2Fashion
China shifts to short-term tools in monetary policy overhaul: Nomura
China is transitioning its monetary policy framework to resemble Western models, focusing on short-term policy rates and reducing reliance on medium-term lending tools. China is reshaping its monetary policy, shifting from the medium-term lending facility to short-term tools like the 7-day reverse repo rate. The PBoC is creating a narrower interest rate corridor and using DR001 as a key benchmark. However, policy transmission remains weak, and open market operations are still developing amid lingering challenges. The People's Bank of China (PBoC) has de-emphasised the one-year medium-term lending facility (MLF), instead elevating the seven-day open market operations (OMO) reverse repo rate as the primary policy rate, according to Nomura. To enhance clarity and improve rate transmission, the PBoC is establishing a narrower interest rate corridor with temporary overnight repo rates acting as the floor and reverse repo rates as the ceiling. The DR001 rate—overnight repo for depository institutions—has emerged as a key interbank benchmark. The shift comes amid growing limitations of the MLF, which has constrained bond market liquidity by tying up large volumes of Chinese government bonds (CGBs) at the central bank. In response, the PBoC resumed direct CGB trading and launched outright reverse repos to manage liquidity more efficiently. Despite this shift, challenges remain. The PBoC does not commit to unlimited lending at the corridor's ceiling. Transmission from policy and interbank rates to bank lending and deposit rates remains weak, with window guidance still critical. Open market operations are also in a formative stage, as shown by the suspension of CGB purchases shortly after resumption. Fibre2Fashion News Desk (HU)
News18
20-06-2025
- Business
- News18
Stock Market Updates: GIFT Nifty Signals Negative Start; China Holds Lending Rates
Last Updated: Benchmark indices Sensex and Nifty are expected to be influenced today by a mix of global and domestic factors Sensex Today: Benchmark indices Sensex and Nifty are expected to be influenced today by a mix of global and domestic factors, including Japan's inflation data, China's loan prime rate decision, escalating tensions between Israel and Iran, India's forex reserves update, and institutional activity. As of 8:40 AM, GIFT Nifty futures were trading 25 points lower at 24,778.5, hinting at a weak start for domestic equities. Global Market Cues Asia-Pacific markets showed mixed trends on Friday as investors reacted to China's key lending rate announcements and tracked mounting geopolitical tension in the Middle East. The People's Bank of China (PBoC) held its one-year loan prime rate steady at 3.0% and the five-year rate at 3.5%, matching market expectations. Geopolitical risks remained elevated, with U.S. President Donald Trump reportedly weighing support for possible Israeli military action against Tehran. A decision from the White House is expected within two weeks. In Japan, the Nikkei was last up 0.27%, while the broader Topix index was flat. Core inflation in Japan rose to 3.7% in May — its highest since January 2023 — surpassing April's 3.5% reading and Reuters' forecast of 3.6%. Meanwhile, headline inflation slightly eased to 3.5% from 3.6% in the previous two months, marking its lowest level since November. Elsewhere in Asia, South Korea's Kospi slipped into the red after early gains, down 0.014%, while Australia's ASX 200 also reversed its opening strength, falling 0.37%. Meanwhile, the Bank of England, at its June policy meeting, voted 6-3 to hold the Bank Rate steady at 4.25%, as it continues to deal with sticky inflation and global macroeconomic uncertainty. First Published:
