Confirmation: No RRR Cuts Coming

In case you didn't believe Listen to Xi, Li and the PBoC, which said there would be very little in the way of RRR or interest rate cuts this year, now there's a leaked memo for confirmation.

SCMP: Leaked memo reveals China central bank’s dilemma in battle to keep yuan stable
The People’s Bank of China is reluctant to further reduce the required reserve ratio for fear of such a move resulting in the weakening of the yuan, according to a leaked document.

The information, reportedly leaked from minutes of Tuesday’s meeting between the central bank and commercial lenders, was shared widely after it was published on major mainland online portals including Sina.com and Netease.com.
One of the reasons why I've been predicting a much weaker yuan is the market reaction to loose monetary policy. Back in 2014 I summed it up in Kuroda Says Dump Yen, Yuan to Fall
China cannot simultaneously cut interest rates and expect the yuan to appreciate because hot money will flow out of the country. Short of igniting an economic boom, a yuan rally isn't going to happen. Since the leadership does not want an investment led boom, which is the only way the current economy would be able to deploy massive capital inflows/credit growth, the hot money will leave if rates continue to slide. The other option is to let the tight credit conditions deflation do its work. The painless short-term solutions are gone. Long-term, reforms will lift the economic growth rate, but short-term there are no painless or costless options.

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