US Money Treasury: supply, China credit not growth manipulatingboost stability yuan
TheChina’sUS Treasury,moneyin asupplysemiannual growth exceededreporttoexpectationsCongress onlastWednesday,month didandnot namecredit Chinaincreased,acurrencyfurthermanipulatorbolstering andstablesaideconomicmore“market-growth,based”the reformscentralbankwouldsaidliftonconfiWednesday. dence inWednesday.the renminbi.
TheInSeptember, Report on MacroeconomicandForeignExchange the broad money supply, known as M2, Policies increased by of 8.3 Major percent Trading from a year Partners earlier, up of from the United annual States growthconcludedof8.2 percentthatwhilein theAugust,currencyaccordingpracticestothePeople’s of sixPeople’scountriesBankofChina.“require close attention”,NewloansnoinmajorrenminbiUStradingthe
stood at 1.38partnertrillioncurrentlyyuan($199.2met billion) 2015billion) legislativeinSeptember,criteriaupfromfor enhanced1.28trillionanalysis.yuanin August. TheUSoutstandingTreasurySecretaryyuan-denominated Steven Mnuchindenominatedloanscalled forhadmorereachedtransparencywe 133.27 trillionontheyuanyuan,by“andthe end willofthecontinuethirdquarter,tomonitorayear-andonyear reviewonyeargrowthChina’sof13.2currencypercent,practices, throughongoing the PBOCincludingreported. Thediscussionscountry’swithrealtheeconomy,People’s Bank of China”, he said.
The six major trading partners on the Treasury monitoring list for currency practices are China, Japan, Republic of Korea, India, Germany and Switzerland.
The Treasury said the recent depreciation of the renminbi will likely exacerbate China’s trade surplus with the US.
“China could pursue more market- based economic supportedreformsthatbywoulddomesticbolsternonfinancial confidenceconfidence corporationsintherenminbi,”andlocalthe households,reportsaid. absorbed 2.21 trillion“If yuanthey’d fromfound theawayfinancialtolabel sectorChina, lastitwouldmonth,haveresultinghurt(market)said in the monthlysentimentincrementfurther,”in total socialShahabfinancing.Jalinoos, Credit Suisse GroupSeptemberAG’sglobalwastheheadfirstoftimeFX thetradingcentralstrategy.bank“Buthadthisincludedbeing localayawn,governmentifanythingspecial-itshouldpurpose of total socialwith financing.emerging The specialrisk.bonds were issued mainly to raiseYiGang,fundsPBOCforinfrastructuregovernor, construction,saidlastweekasthattheChinacountry’swill fixed-continueassetto investmentletthemarketslowed “play ina decisivetheyear’srole”firsthalf. in the RMB exchange“Theissuancerate. of local government“Wewill accelerateddevaluation, since and August,” will special not engage bonds incompetitive has whichnotusehasthehadexchangenotablerate influence as lendingwithtradeandfrictions,” corporate Yi bonds, said at a said meeting Zhang of Wenhong,theInternational deputy Monetary director and of theFinancialcentralCommittee.bank’ssurveys and statisticsYihas department. said that “China will continueInSeptember,topushlocalaheadgovernments with issued special reforms bonds of amountinginterestrate and to exchange-rate 738.9 billion yuan, regimes,almostand keep doubling the RMB the Augustexchangefigurerate broadlyandaccounting stable at foran adaptive33.5percentequilibriumofthemonthly level.” increaseMarkusin Rodlauer,totalsocialdeputyfinancing,directorthecentraloftheAsiabankandsaid. Pacific DepartmentTooffsetdomesticattheInternationaleconomic downsideMonetary Fund risks (IMF), and believed external headwindsthattheRMB amid exchange trade rate tensions, is the in PBOC line” with has enacted China’s four economicreductionsfundamentals. of reserve requirement“According ratiostoourframework, for financial institutionstheexchangethisrateyear,ofwith the therenminbilatesttakingisnoteffectout onof Monday. line. broadly The cuts in have line with injected the somefundamentals,”1.85trillionRodlaueryuanintotoldthe financialBloombergsectorlast week.since April. concernsdatathatshowedfasterthatexpansion SomeOnTuesday,economistsTreasuryexpressedDepartment China’s ofholdingsthemoneyofUSsupplyTreasuriesandcredit fell mightforathirdadd straight inflation month— pressure, to though$1.165trillion monetary in August authorities from have$1.171reiteratedtrillioninthatJulythere—theirwill belowestnochangetotalin moreinthethan“prudent a year. andInneutral”August, withpolicythestance. US-China tradeOverdisputetheweekend,escalating,YiGang, there thewascentralconcernbankinthegovernor,USthatChina, the largest non-US holder said of the current quantity and growthTreasuries,rate ofwouldmoneyretaliateandcredit by “appropriate”ButlevelsJonandHill,wouldinterestmaintain rates stablestrategistprices.atBMOHe forecastCapitalMarkets there that has the in annual New York, inflation said level wouldbeennobeevidenceslightly higherofthat.than 2 percent. “This was probably just to support“DespiteChina’salesscurrencybenigninflationary and handle environment,day-to- day we expectflows,”thatHill stabilizingsaidofthegrowthTreasury will besales.themost important goal for monetary policy in the near future,” Bloomberg, said Li Xinhua Zhennan, and an economist Reuters contributed with Goldman to this Sachs story. (Asia).