By David Liu, Asian trading is dragging cross markets including commodity currencies lower this morning after Premier Wen Jiabao set more relaxed growth and inflation targets at the National People’s Congress. Markets expect the continued policy adjustments targeting lower inflation will hurt Chinese consumption of major raw goods, pressuring Australian and New Zealand dollars. Speech highlights include:
- Chinese government targets GDP growth of 7.5%, inflation of 4%, money supply growth of 14%
- Budget deficit to be at an estimated CNY 800 billion
- Fiscal spending to rise to CNY 12.43 trillion
- Prudent monetary policy will be maintained, will continue fine tuning operations
- Yuan exchange rate will be basically stable, will increase two-way flexibility, increase yuan-based trade
- Government will support lending for homebuyers, will bring housing prices back to reasonable level
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