Week of August 28, 2011 thru September 3, 2011

INSIGHT: Cutting Rate BOJ Pays On Reserves Low-Ranked Option

By Hiroshi Inoue

TOKYO (MNI) - Despite market speculation, the Bank of Japan sees
lowering the interest rate it pays on excess reserves held by financial
institutions as a low-ranked policy option.

China PBOC Offl Says SMEs Facing Cost, Liquidity Pressure

BEIJING (MNI) - China's small and medium sized enterprises (SMEs)
are facing pressure from both higher costs and tighter liquidity
conditions, a senior central bank official said Friday.

"Financing difficulties among SMEs does exist," Du Jinfu, a
Vice-Governor of the People's Bank of China acknowledged in an online
interview with the official People's Daily.

Du said rising costs, including for raw materials and labor, have
increased demand for liquidity and government tightening has added to
these problems.

Analysts: Japan Noda Cabinet Unlikely To Spur Econ, Stocks

By Yasuhiko Seki

TOKYO (MNI) - Prime Minister Yoshihiko Noda formed a party-unity
cabinet on Friday as Japan faces mounting economic challenges, but
economists see limited prospects for the team to boost the outlook for a
sustained economic recovery and a stock market revival.

Update: Japan PM Noda Forms Cabinet, Seeking Party Unity

TOKYO (MNI) - Japanese Prime Minister Yoshihiko Noda on Friday
formed the cabinet that he hopes can quickly put together programs to
rebuild the quake-battered northeastern regions and head off the drag of
the yen's relentless rise on an export-led economic recovery.

Facing tough negotiations with opposition parties in the hu

Update: China PBOC Sets Dlr-Yuan Parity Lower At 6.3896

--Updating 21:21 EDT Story In 2nd, 3rd Par To Include HK CNH Fixing

BEIJING (MNI) - The People's Bank of China set the yuan's central
parity rate against the U.S. dollar at 6.3896 on Friday, lower than
Thursday's 6.3859.

In Hong Kong, the offshore yuan (CNH) spot rate was fixed at 6.3551
against the greenback on Friday, compared with Thursday's 6.3510.

The fixing is based on an average of bids from 15 participating
banks and is calculated by the Treasury Markets Association, a Hong
Kong-based industry group.

China 'Big Four' Banks Lent CNY140 Bln In August: Press

BEIJING (MNI) - China's "big four" state-owned banks lent out
CNY140 billion as of August 29, the 21st Century Business Herald
reported Friday, citing sources close to banks.

The report said the figure was smaller than the monthly average
CNY200 billion lent out by those banks in June and July.

Lending by the big four -- Industrial and Commercial Bank of China,
Bank of China, China Construction Bank and Agricultural Bank of China --
typically accounts for around 40% of total bank loans, suggesting new
loans last month may have been around CNY300 billion.

Update: China PBOC Offl Warns of Risks of Global Slowdown

BEIJING (MNI) - The risks facing the global economic recovery are
increasing, a senior People's Bank of China official warned in published
comments, saying that emerging market growth is slowing while inflation
is now spreading from the developing to the advanced economies.

Japan PM Noda To Form Cabinet, Seeking Ruling Party Unity

TOKYO (MNI) - Japan's Prime Minister Yoshihiko Noda on Friday plans
to form the cabinet that he hopes can quickly put together programs to
rebuild the quake-battered northeastern regions and head off the drag of
the yen's relentless rise on an export-led economic recovery.

Facing tough negotiations with opposition parties in the hung
parliament, Noda also wishes to unite the div

China PBOC Sets Dlr-Yuan Parity Lower At 6.3896; +6.74% Y/Y

BEIJING (MNI) - The People's Bank of China set the yuan's central
parity rate against the U.S. dollar at 6.3896 on Friday, lower than
Thursday's 6.3859.

Dlr-CNY Eur-CNY Yen-CNY

Today fixing 6.3896 9.1231 8.3025
Prev. fixing 6.3859 9.1733 8.3031
Prev. close 6.3813 -- --
%Chg since June 19* 6.85% -- --
%Chg Y/Y 6.74% -4.59% -2.93%

China Paper Calls For Stable Policy, Despite Easing Prices

BEIJING (MNI) - A leading Chinese official newspaper called Friday
for policy stability, despite easing inflation and signs that economic
growth is slowing.

The official China Securities Journal said in a front-page
editorial that headline consumer inflation likely eased in August, but
cautioned against declaring victory.

"The turning point has likely arrived, but that does not mean we
have succeeded in the fight against inflation," it said, warning that
inflationary pressure has not significantly eased.