Liquidity injection to have bounced back in China, M2 likely grew 8.6 pct in June

Liquidity injection in China is likely to have bounced back a bit due to pro-growth policies. According to a DBS Bank, M2 is likely to have grown 8.6 percent in June, as compared with May’s 8.5 percent. Liquidity injected through the latest required reserve ratio cut last month should have fed through to small and medium size bank.

Therefore, both new rise in aggregate financing and new yuan loans should be revived in June. This might translate into some upward pressure on inflation rate.

“Food prices should stay elevated due to the spread of swine fever. The CPI is projected to rise by 3.0 percent YoY, up from 2.7 percent in May”, added DBS Bank.

For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex