Interbank Market。    Liquidity conditions improved slightly last week as central bank refinancing helped to calm market nerves.。    However, bond market rates climbed further due to the recent liquidity tightening, concerns about regulation tightening and continuing industrial reflation in the short term.。    PBOC refinancing helped to anchor market expectations towards liquidity conditions, but concerns over further financial regulation toughening remains.。    Forex Market。    Jerome Powell was chosen as the new US Fed chair. The market expects the current Fed monetary policy stance to remain unchanged in the short term.。    The UK pound depreciated after the dovish rate hike by the Bank of England. Fully expected by the market, it was the first rate hike in the UK in more than a decade.。    The Japanese yen also depreciated further after premier Abe won another term. The market expects the current monetary policy easing to persist in Japan.。    Renminbi Exchange Rate。    The renminbi appreciated moderately against the US dollar last week.。    Currently, along with China’s rising market interest rates, the relatively large gap between US-Sino interest rates leads us to believe the renminbi exchange rate will remain stable in the short term.。    We maintain our forecast for US$/RMB spot rate at end-2017 at 6.65-6.75 and that at end-2018 at 6.95-7.05.。    China Policy Update。    PBOC governor Zhou Xiaochuan warned of a Minsky Moment at a press conference during the 19th Party Congress and called for stronger financial regulations to control systemic risks last week.。    Governor Zhou said the financial system faces increasing frangibility in term of high leverage and liquidity risk, credit risk and cross-market contagion risk.。    Zhou suggested strengthening financial services to the real sector, enhancing macro prudential regulations and pushing forward structural reforms and opening in the financial system.。

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