Chinese officials stepped up efforts to boost the economy and underpin the yuan. Investors are deeply concerned about the future of the country’s economy.
The People’s Bank of China (PBOC) announced on the 1st that it will cut the foreign currency deposit reserve ratio compulsory from commercial banks to 4% from the 15th. It used to be 6%. This is the first time this year that the foreign currency deposit reserve ratio has been lowered.
China cuts foreign currency deposit reserve ratio to strengthen yuan support
People’s Bank of China cuts foreign currency deposit reserve ratio to 4% from 15th
Source: Bloomberg
Officials also announced new measures to boost the struggling real estate sector and announced plans to expand tax breaks related to things like childcare and education.
China’s economy is under pressure from a persistent housing crisis, slowing growth in external demand and rising unemployment. Concerns over high debt levels have kept the authorities from taking action so far in a targeted manner, forgoing the kind of large-scale stimulus launched in the aftermath of the 2008 global financial crisis.
“The policy package has exceeded market expectations,” said Xing Zhao-Peng, senior China strategist at Australia and New Zealand Banking Corporation (ANZ). “Confidence will be boosted in the short term. We need more evidence to see if this is a tipping point,” he said.
On the 1st, the offshore yuan rose 0.5% against the dollar at one point, but then reduced its gains. An index of Chinese real estate developers was up about 1% at the close of the morning session after a 2% gain at one point.
Eddy Chong, senior emerging markets strategist at Crédit Agricole CIB, said the real estate support measures and the cut in the foreign currency reserve requirement ratio were announced before the market opened. ) issued some positive signals, it is possible that there was an aspect of taking advantage of this timing to support the Chinese market.” “But the market reaction is still pretty muted for that.”
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Original title:China Ramps Up Campaign to Boost Fragile Economy, Currency (1)(excerpt)
2023-09-01 04:17:11
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