China appears to have prioritized goosing growth over concerns about fund outflows, with the central bank moving Monday to cut banks' reserve requirement ratios (RRR).
The People's Bank of China (PBOC) cut the RRR, or the amount of cash banks need to hold, by 0.5 percentage point, surprising markets with the move that came in the early evening China time.
The cut, which came into effect Tuesday, means that most large Chinese banks will have a reserve ratio of 17 percent. This is the fifth time in the past year that the PBOC has cut the RRR, with the last cut on October 23.
RRR cuts are designed to increase liquidity in the economy, in the hope of boosting consumer spending and capital investment.
This is positive for the risk appetite and the price of indexes.
On the other hand this might lead to devaluation of the yuan, which is negative for the indexes.
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.